yep it exposes you potential large movements in exchange rates, which fluctuate much more than interest rates.
Look up the news about mortgages linked to the Swiss franc as an example. But linking to USD would be more stable in the case of Taiwan.
What make you think € would rise? With the ongoing eurozone stimulus I believe it will help keep the € cheap.
Yeah it would seem euro should be cheap for a few years.
Yes, however if you borrow at rock bottom, upside is more likely than downside.
All the bad news regarding the Euro are already out:
- QC pushing the exchange rate down.
- Unwillingness to reform in Southern Europe.
- Grexit.
- Possible UK exit of EU.
- Anemic growth in at least 2015.
i would think no. 5 worst, however YMMV.
This means that good news boosting the Euro will be the next, it might happen in 1-2 years, it might happen in 5, however your loan will be 20-30 years. So short term you are right, however if you base any decision giving you massive exposure on the last week’s news, you are an amateur as an investor and currency trader and should steer clear of such instruments, apart from a savings account in the local bank.
If you’re getting paid in EUR, by all means take out tons of loans. If you’re getting paid in NTD, however…
Wait and see what’s going to happen in Greece this coming Sunday!
Yes, that will depress for another year - and you still want to expose yourself for a few decades?
What Hokwongwei said - only do so if paid in euros.
Good luck on that one, there’s one born every minute.
According to my favorite Apple Daily, the number of people buying owner-occuppied homes (actually buying it to live in it, what a novel concept) is rising because the market isn’t looking good for investment. Looking ahead to Q2 of this year, about 70% of people around the country expect to buy homes for themselves instead of as investment vehicles.
The number breakdown is kind of funny and I don’t get it. Of prospective buyers in the March-May period, 33% are first-time buyers looking for an actual home, while another 36% are buying a second or third or whatever home for themselves; investors make up just 25%. An expert predicts that investors won’t flock back until prices fall to 80% their current levels.
Have a nice weekend.
"Taiwan’s nationwide house prices increased by just 0.98% during the year to Q1 2015, after government housing market cooling measures caused a dramatic slowdown from a spectacular 11.28% growth in Q1 2014. House prices increased 1.37% during Q1 2015.
Residential property transaction volumes across Taiwan fell to a 13-year low of less than 320,000 units in 2014 and are expected to remain depressed this year amid concerns over a government tax reform plan which is expected to raise the tax burden on property investors. In Q1 2015, the country’s real GDP growth rate stood at a modest 3.46%, after 3.7% in 2014, 2.2% in 2013, 2.1% in 2012 and 3.8% in 2011, according to the IMF."
Source: globalpropertyguide.com/inve … ?mid=44372
Surely this fall to a 13-year low in transaction volumes is not just attributable to tax reform plans. Has the incredibly inflated Taiwanese property market - based on rental yield (sub 2%) and price/income ratios - finally stalled? Based on these transaction volumes, IMHO it has.
There is also a strong argument to be made for the bottoming of the interest rate cycle in 2015/2016 and the gradual increase in interest rates over the next few years, with a return to “normal” rates over the long-term (10 years). With 5-6% mortgage rates in Taiwan, there is no chance these inflated real estate prices can last in places like Linkou and Taoyuan.
The funny thing is most younger real estate speculators have never seen a real estate bust in any way, shape or form. They won’t believe their eyes when it happens, but when the reality sets in - SELL, SELL, SELL. Panic selling will ensue and dreams of making fortunes on those $20 million apartments in Linkou, etc. will quickly turn into nightmares.
Historically, whoever buys at the top of a market, suffers negative returns for decades. Just look at Japan’s real estate market in the early 1990s, and the 2000 Tech Bubble in US stocks, which took one and a half decades to reach those prior peak levels.
If you are buying property, buy it to live in it. Or buy new property, old buildings cost a shit ton to manage. I would never buy a house that is older then 5 years again. Unless you are prepared to take it down and rebuild it with something better on top. The thing is chinese investors didnt have much choice regarding investing their wealth, so they invested largely in housing which worked out good for them, in the future more options will become available and less people will invest in housing, so that will slow down the growth which is what the government wants.
A Taiwanese infographic to show how incredibly overvalued the real estate market is.
Source: thenewslens.com/post/178355/
Graphic 1: Price/Income Ratio
Yellow: Taipei City - It takes over 15 years of income to buy an apartment in Taipei City
Green: New Taipei City - It takes over 12.5 years of income to buy an apartment in New Taipei City
Red: Taiwan (entire country) - 8.4 years
Editor’s note: The first indicator is the price income ratio, calculated by dividing the resulting housing prices. The normal range is 3-6 times the 2014 fourth quarter, New Taipei City and Taipei each 12.81 times and 15.19 times.
Graphic 2: Mortgage Debt Burden on Households
Taipei City: 66% of household income is used to service the mortgage debt
New Taipei City: 54% of household income is used to service the mortgage debt
Taiwan Country Wide: 34% of household income is used to service the mortgage debt
Editor’s note: The second indicator is the loan burden ratio, calculated by dividing the amount of the monthly mortgage income. Normal standard is lower than 33%, Taipei and New Taipei loan burden rate of over 50%, which means more than half of the income to pay the mortgage to take.
You, sir, deserve a recommend.
This country is in trouble.
My wife and I just bought an apartment in Yilan county. Every time that I feel upset about the constant rain I have a look at the cost of buying a home in Taipei and suddenly feel much better about living in Yilan.
Nice posts above - wonder if global comparisons are available for the same yardstick.
[quote=“RockOn”]A Taiwanese infographic to show how incredibly overvalued the real estate market is.
Source: thenewslens.com/post/178355/
Graphic 1: Price/Income Ratio
Yellow: Taipei City - It takes over 15 years of income to buy an apartment in Taipei City
Green: New Taipei City - It takes over 12.5 years of income to buy an apartment in New Taipei City
Red: Taiwan (entire country) - 8.4 years
Editor’s note: The first indicator is the price income ratio, calculated by dividing the resulting housing prices. The normal range is 3-6 times the 2014 fourth quarter, New Taipei City and Taipei each 12.81 times and 15.19 times.
Graphic 2: Mortgage Debt Burden on Households
Taipei City: 66% of household income is used to service the mortgage debt
New Taipei City: 54% of household income is used to service the mortgage debt
Taiwan Country Wide: 34% of household income is used to service the mortgage debt
Editor’s note: The second indicator is the loan burden ratio, calculated by dividing the amount of the monthly mortgage income. Normal standard is lower than 33%, Taipei and New Taipei loan burden rate of over 50%, which means more than half of the income to pay the mortgage to take.[/quote]
This numbers mirror the ones in Spain before the real state bubble burst in 2008-2009. If you look at some of my early posts in this thread (was it in 2012?), I was giving the taiwanese market about 4-5 years before it collapsed. If you go to Beitou, the smaller apartments prices are already going down. I’m completely convinced that between 2016-2017, the real state market in Taiwan may explode, and it won’t be pretty then for the people who bought recently and end up having to pay a mortgage that costs 2x the real value of the property.
I’m afraid the government’s sales tax hikes are going to be applauded as having stemed the rise in house prices, when it has little to do with it. It’s more an investment saturation as first time buyers can’t afford, even at ultra low interest rates, to get on the ladder and the present highs are too risky. I expect huge cash extractions from all markets over the coming months due to there being no accurate measure of real values, whether it be stocks, bonds, houses, land, etc, anymore.
The government’s tax penalties on properties sold only effectively reduced supply, without affecting demand. This would drive prices up typically, not down, and it only extended the initial investment period for speculators. It didn’t frighten them away. Why would it? They got into houses because the stock markets were too manipulated. Now there’s nothing left to get into, so I see the potential for liquidation.
I saw this in the news this week. Wages are increasing, but house prices are increasing faster.
Chinese:
薪水跟不上房價漲勢。據最新統計，小市民今年要存足在台北市購屋的自備 款，平均要花5.5年的時間，新北市也要3.7年，分別比4年前多出11個月跟7個月。顯示即使政府打房，民眾買屋的壓力仍是「有增無減」。對此學者直 說：「聰明人不會現在買房子」，再撐一段時間，房價就會降價。
永慶房產集團根據內政部與主計處資料，從2012到2015進行年房價與薪水交叉分析，這4年間，薪水扣掉繳稅後的家庭可支配所得，台北市是 129.3萬、新北市94.8萬，只有小幅增加1.1％與3.9％。同時間，北市每坪房價60.4萬，漲了1成8。新北市房價31.5萬，更漲了2成2， 調薪幅度完全趕不上房價漲幅。
以一般民眾最常買的30坪左右住宅來說，在台北今年總價平均要1812萬元，扣除6成貸款，購屋族要有先準備707萬，不吃不喝5.5年能存足，比2012年的4.6年，多出11個月。新北市要準備350萬，不吃不喝也要3.7年，多出7個月。
永慶房產集團研發中心經理黃舒衛表示：「雙北居，大不易！」從所得面來看，雙北市2015年可支配所得與2012年比，成長幅度都在5％以下，反觀 房價的漲幅都超過1成5。政府為了打擊房市投機降低貸款成數，雙北目前均維持在六成左右，對比薪資成長幅度遠落後房價，使的存自備款年限拉長。
「所以聰明人不要現在買房子！」淡江大學產經系副教授莊孟翰耳提面命說，現在房價已經在跌，未來估計會跌2到3成，只要降到安全幅度，銀行貸款成數 限制也會放寬，到時自備現金壓力就會下滑，但這個時間點大概要等2到3年。至於未來可能升息造成貸款負擔加重，莊倒認為影響不大，因為現在資金充裕，即使 升息，幅度也不大。
English translation:
Scholar: Smart People Wouldn’t Buy a House Now
Salaries have not kept up with rising house prices. According to statistics, the average person would need to save for an average of 5.5 years in order to put down a deposit on a house in Taipei City this year. With the figures for New Taipei City reaching 3.7 years, the length of time required has increased by 11 and 7 months respectively, in comparison with figures from four years ago. This clearly shows that despite the government’s actions to reduce prices, the financial strain of buying a house is still increasing. This has led to one scholar proclaiming, “smart people wouldn’t buy a house now” and stating that waiting a while will see house prices fall.
The Yung-Ching Realty Group used statistics obtained from the Ministry of Interior and the Directorate-General of Budget, Accounting and Statistics to conduct a cross-sectional study into house prices and salaries between 2012 and 2015. The study showed that during these four years, the average family’s discretionary income from salaries after tax deductions in Taipei City was NT$1,293,000, while in New Taipei City it was NT$948,000. This only represents small-scale increases of 1.1% and 3.9%, respectively. At the same time, the price per ping of property in Taipei increased 18% to NT$604,000, while in New Taipei City the increase was even higher at 22%, with a price per ping of NT$315,000. This shows that salary increases have not kept up with the increase in house prices.
Using the most common type of home that is bought as an example (approximately 30 ping in size), the average price of buying such a home in Taipei City today would require NT$18,120,000. With a 60% mortgage, home buyers would need to find NT$7,070,000 for such a property. Only by not eating and drinking for 5.5 years would a home buyer be able to save up for the deposit. This is an increase of 11 months in comparison to the 2012 figure of 4.6 years. The figures for New Taipei City show that home buyers need to prepare NT$3,500,000, which would take 3.7 years without eating and drinking. This is an increase of 7 months.
Huang Shu-wei, director of the research center at Yung-Ching Realty Group stated: “It’s really not easy to live in either Taipei City or New Taipei City”. To look at things from an income perspective, a comparison of discretionary incomes in Taipei City and New Taipei City between 2012 and 2015 shows an increase of less than 5%. In contrast, house prices have increased by over 15%. The government has taken action to cool investment in the housing market by reducing the amount that can be borrowed, with levels in both Taipei City and New Taipei City currently hovering around 60%. In contrast, salary growth is still lagging way behind house prices, resulting in a longer times needed to save for a deposit.
“Smart people, don’t buy a house now!”
Zhuang Meng-han, assistant lecturer at Tamkang University’s Industrial Economics Department, warned that house prices are already falling, and are predicted to fall between 20 - 30% in the future. He also stated that as long as the fall in prices stays within a safe range, bank limits on mortgages will be relaxed. When this happens, the requirements to prepare a large deposit will also be reduced, however it could take between two to three years to reach this point. Mr Zhuang also believes that the influence of possible interest rate rises in the future leading to increased mortgage burdens is limited. There is currently an ample supply of capital, and even if rates do rise; the extent of the rise will be minimal.
This is my own translation. Apologies for any errors. Feedback is always welcome. 
I’m not sure that analysis is accurate - it bases house prices on the affordability of houses to the general public.
As long as houses keep selling, their price will be kept up by a simple demand and supply, in the current market the demand (and hence the price) is kept up by existing house owners (investors), as long as investors keep buying and renting out / selling to other investors, there is no need for the general populations to have affordable housing.
What may cause a drop in house prices is if other avenues of investment become unstable and investors sell property en-masse in order to have more cash on hand, at present, financial markets are looking somewhat shakey (as is the oil price) and many investors are on the cusp of such a move.
The caveat being that if they suddenly decided that rather than having cash in the bank, a better idea is to get out of financial markets and into more property, it could continue to drive the price up further.
Another factor, tmz, is elections. If it turns out that lots of people are unable to buy their homes, politicians have an incentive to intervene and drive prices down. So it’s supply and demand, but it can be strongly influenced by government policies, more like a stock market than a typical market.
[quote=“tmz_99”]I’m not sure that analysis is accurate - it bases house prices on the affordability of houses to the general public.
As long as houses keep selling, their price will be kept up by a simple demand and supply, in the current market the demand (and hence the price) is kept up by existing house owners (investors), as long as investors keep buying and renting out / selling to other investors, there is no need for the general populations to have affordable housing.
What may cause a drop in house prices is if other avenues of investment become unstable and investors sell property en-masse in order to have more cash on hand, at present, financial markets are looking somewhat shakey (as is the oil price) and many investors are on the cusp of such a move.
The caveat being that if they suddenly decided that rather than having cash in the bank, a better idea is to get out of financial markets and into more property, it could continue to drive the price up further.[/quote]
At a certain price it just makes more sense to rent or move elsewhere, I believe that is what is really happening in many areas of Taiwan. Now the air is going out of the Chinese economy and Taiwan’s, doubt we will see any further increases for years. I have been saying that like many people for years, but I am and many others are just happy to bank our savings, rent and think of investing somewhere else. was recently in Vietbam and you can buy (with caveats) land plots 120m3 in resort areas for 1-2 million ntd. Apartments or houses for less than 3 million ntd. Taiwan is just ridiculously overpriced.