[quote=“headhonchoII”][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.[/quote]
Yeah, I tend to agree with you, I don’t think prices in Taiwan will fall en-masse (maybe in some of the bigger communities that are located far from city centers, which are already struggling to sell all their houses). But in the city, prices will stagnate/rise slower rather than falling…
Vietnam would be a fairly good place to buy. I’d be staying away from mainland Europe (bar a few exceptions). I’m actually thinking countryside NZ, the cities are overpriced but you can get decent housing in the country for under 200kNZD (120kUSD)…
Let’s talk about the value of what you get if you buy. Not just the value that somebody else might buy it off you one day if you are lucky, but is it worth it spending 10-20 million ntd for an apartment in most places in New Taipei City, you really don’t get much for the dollas do ya? This is not peanuts. This is 300,000 to 600,000 USD we are talking about. I’m not even going to talk about Taipei city itself! Now I pay about 10,000 usd a year all in to rent, it’s annoying but very reasonable compared to other capital cities. i do get reasonable value out of it living near the MRT and work.
So if in the end the speculative money leaves the market you could end up overpaying for a heap of dirty concrete or a place With a factory rammed up its ass in the
Boondocks. Taiwan isn’t the UK or France or Ireand or Sweden, it works well, but a lot of the country looks like concrete blocks were randomly placed over the land.
I’m going to beat a dead horse here again but coming back from Vietnam where apartments and houses near a unesco site and a 20 mile beach and clean water and air are going for 2-5 million , well it brings it home to you what a shitty deal people get here. Taiwan used to be like that of course 20 years ago or so.
yes I would love to have a place in yilan, hualien or taidong but they are already just too expensive compared to nice places
overseas.
Btw, I read the population stats of people moving to New Taipei City and taoyuan etc,
The big migration was a few years ago, now the population is pretty much static, probably due to demographic trends more than anything. Without immigrants who can afford or want to buy this overpriced housing things well …
Can have fun with this website. Interestingly they’ve got a map set-up showing price drops in all different forms, such as against the registered price, or against previous quotes, and even along MRT stations of your choice.
Looking at pricing, Sanxia is showing quite a few drops, Taoyuan city has a fair amount of reasonable priced apartments (which it should since it’s Taoyuan). Linkou is still a bit pricey in my opinion but it has been improving in terms of infrastructure. Tamshui prices are cratering. Of course Taipei is still expensive as hell even if the froth is coming off.
But the big take-away is that it definitely looks this bubble is deflating at the moment. It makes me finally think, hmmm, maybe I could look at buying an apartment in New Taipei City if another 10-20% comes off. There’s also been a record low number of transactions in the property market for the last 20 years, 1000s of real estate agents have already lost their jobs, if people want to sell they are just going to have to reduce the prices to entice buyers to do the deal.
(on a separate note…I was looking at Hong Kong prices for a laugh, it’s about 37,000 NTD for a 2 Bedroom (?) 10 PING apartment to rent in the back arse of Hong Kong, that place is a nightmare,the average family of four lives in a 15 PING apartment, things could be worse folks!).
Prices in Hong Kong are also going down. I look at the true value of things, prices are inflated with 30% or more. Both in Hong Kong, Taipei and other parts of Asia. There is still a whole lot of room/land on the mainland to build. Which is only 150 km away from Taiwan. And on the border with Hong Kong.
But then the price of apartments in Shenzhen went up 30% in the last year. It is China’s Silicon Valley I suppose.
All the same I’m more interested to discuss the issue as pertaining to Taiwan, I just thought the HK situation was an interesting anecdote.
There is a lack of informantion in English about many things in Taiwan, including property issues, there’s unsurprisingly,
much more complete and up to date info in Chinese blogs ,
Newspapers and magazines. You still have to use your own facilities to parse the information from the bias at source,
Since newspapers often just lazily quote real estate agents and call that an article. Government ministers often waffle a lot about this and that policy but it’s the legislature that actually waters down the bills and approves them or not.
The best places to get information is from the source like that housefun website and government registered price database.
[quote=“Mr He”]Taipei prices tanking is reported very extensively in the Chinese press.
The general mood regarding real estate has changed - it’s seen as something going down, not up.[/quote]
I think it is pretty early to be using an adjective as strong as “tanking”, especially for Taipei proper.
Much of the coverage in the Chinese press is – as HH I think mentioned earlier – taken directly from quotes from real estate agents. A prime tactic of the real estate agents right now is to make “scare pitches” to sellers directly and through the press. They deliberately exaggerate the potential effects of the new tax policies in an effort to lower sellers’ bottom-line asking prices and close house sales more quickly. The agents prefer to take a slightly lower commission to close a deal quickly than to spend a lot of potentially unpaid time on dragged-out negotiations.
(I’m speaking above from my own informal research, but also from my experience talking to quite a few realtors a couple of months ago when I was considering selling my apartment.) They essentially admitted to using the tactics I mention above, and also confided that they consider that holding onto property in the area continues to look like a very good medium to long-term investment.
In my area (Wanhua), prices first spiked slightly and then softened slightly over the past 18 months. They now seem to have settled at around where they were about 18 months ago. I predict that local price disparities will continue to converge at about this level with not much rise or fall in the average price. I expect that the average price will then continue very gradually to increase over time, with more rapid increases coming as more urban renewal occurs in the area.
I’m just speaking for Wanhua here, as I haven’t been following the overall Taipei market closely.
I think your analysis is flawed. When you do investments anywhere, do not piss against the fundamentals, as your pants will get wet. In this case - supply remains strong in the outer areas, and you have a fair bit of speculative investment.
Salaries are not rising, and the amount of housing debt is fairly high. I do not see this market have any strong fundamental underpinning, and only if the Chinese materialize as buyers in force, will the market have any hope of any sustained uptrend.
[quote=“Mr He”]I think your analysis is flawed. When you do investments anywhere, do not piss against the fundamentals, as your pants will get wet. In this case - supply remains strong in the outer areas, and you have a fair bit of speculative investment.
Salaries are not rising, and the amount of housing debt is fairly high. I do not see this market have any strong fundamental underpinning, and only if the Chinese materialize as buyers in force, will the market have any hope of any sustained uptrend.[/quote]
I think my analysis is strong. I’ve been posting in this thread and related Forumosa threads for many years on housing prices, and if you read my old posts, you will find more detailed analysis – including on the issues of salaries and housing debt, and why Taipei’s market is complex and why those factors – while important – exercise relatively less weight on prices here than in many other parts of the world.
I’ve also made fairly specific Taipei price trend predictions in my posts over the past decade, and have a pretty good track record if I may say so myself. (But in the very unlikely event that it all comes crashing down on my shoulders, I’ll not hesitate to apologize to Mr. He .)
[quote=“Rotalsnart”][quote=“Mr He”]I think your analysis is flawed. When you do investments anywhere, do not piss against the fundamentals, as your pants will get wet. In this case - supply remains strong in the outer areas, and you have a fair bit of speculative investment.
Salaries are not rising, and the amount of housing debt is fairly high. I do not see this market have any strong fundamental underpinning, and only if the Chinese materialize as buyers in force, will the market have any hope of any sustained uptrend.[/quote]
I think my analysis is strong. I’ve been posting in this thread and related Forumosa threads for many years on housing prices, and if you read my old posts, you will find more detailed analysis – including on the issues of salaries and housing debt, and why Taipei’s market is complex and why those factors – while important – exercise relatively less weight on prices here than in many other parts of the world.
I’ve also made fairly specific Taipei price trend predictions in my posts over the past decade, and have a pretty good track record if I may say so myself. (But in the very unlikely event that it all comes crashing down on my shoulders, I’ll not hesitate to apologize to Mr. He .)[/quote]
Yes, however you forget a piece of basic psychology. That is that a scare tactic in order to make people sell fast only works if pricing in general is coming down. If they have a strong list of buyers willing to buy at most prices, that tactic will not work and will not be needed.
They are feeding a story of the market being weaker going forward to the sellers and being stronger going forward to the reluctant buyers, and then they hope that they manage to close something.
Most real estate agents I have talked to told me that the market is very weak with the number of deals falling, as the buyers remain on the sides waiting for the correction.
Not necessarily. In this case the scare tactics are being used to take advantage of lingering uncertainty about the extent of the impact of the government’s new tax policies aimed at cooling the housing market.
[quote=“Mr He”]They are feeding a story of the market being weaker going forward to the sellers and being stronger going forward to the reluctant buyers, and then they hope that they manage to close something.
[/quote]
I agree that this is generally how they work. This makes their recent admission to me – a seller (who changed my mind about selling) – that they still see very good value in Wanhua in the medium to long term, all the more compelling.
Yes, this is objectively true, in terms of the number of deals being closed now. Right now, most owners (potential sellers) are still convinced that their property still has room to rise in value, and the would-be buyers are waiting in hopes that the market will fall.
Please note that my in my post on market outlook I was limiting my comments to Wanhua. This reflects my overall approach to looking at the Taipei market. I’m actually partially in agreement with you, in that I would not advise anyone to speculate right now in property in Taipei’s pricier neighborhoods (concentrated in the eastern, northern, and central parts of the city). That might very well be pissing in the wind, at least in the short to medium term.
However, I believe there is still a lot of upside remaining in the market on Taipei’s west side. The extreme price disparity between the east and west sides of the city arose from historical factors that are gradually fading out, especially given the government’s current focus on long-term development of the west side as a transportation hub and riverside cultural and historic area. One key factor to making wise investments on the west side (or in Taipei county) is for buyers to give as much or more weight to the ratio of land-share-to-price, as they give weight to building-share-to-price. The more land area, the more long-term potential upside because of the potential for future redevelopment, generally speaking.
This might offer a modicum of protection in say Wanhua, however for the market as a whole only a little protection is offered by this.
The fundamentals are still against the market as a whole. The very low exchange rate might keep thing tickig over in the shorter term, however longer term, I see a bear market like the 1991-2003 one. I have little ability to foresee the magnitude of the fall, it depends on how well the financial system holds up to it. It also depends on what happens to the unemployment rate and salary growth here. If the softening in China leads to a recession here then the heavily invested buyers will come under pressure, and in that case the market could do down fast.
I personally think the fundamentals of the market are beyond wacked. The population is not rising much and will probably eventually even start to fall. The supply is increasing (more buildings being built, many of those started or plans put in place during a rapidly rising market) so supply is increasing, but at the same time salaries are not. So you have increasing supply and no reason for demand to increase. The prices are already at some of the highest levels relative to incomes in the world. Much of the purchasing has been based on speculation about Chinese investors potentially coming. All it needs is for some rise in interest rates or for China to go hard against investment in Taiwan and a downward spiral could start very quickly with all those investors looking for the exit doors. If you look at Japan (which is probably a better place than most to compare with Taiwan) yes, it is possible for prices to go down for 30 years.
I appreciate your perspectives Mr. He and naguoning. As far as interest rates, the government seems highly unlikely to raise them significantly in the near future. I agree that if there were a severe recession, then all bets would be off.
I think the Taipei City real estate market is a weird market, but weird in discernable ways, and I think the prevailing local culture and psychology are going to keep it that way for quite a while longer. Nevertheless, it is still important to keep an eye on the fundamentals as you point out.
The fundamentals here are very Japanese, actually. What the trigger will be I would not dare to guess.
Unemployment figures are good, however that’s a lagging indicator. GDP growth is negative, and China is still slowing down. It could be a spike in unemployment here along with the US increasing rates? Nasty news out of China?
Actually, if we look at what Japan did in the 1980’s, which was to invest in the US, it might offer some lessons. When the Japanese economic bubble came home to roost, the first thing they did was to liquidate their overseas investments - we saw the US do some of the same after 2008. This could well have an impact here.
If people are nervous enough, we could see a minski moment in the Tawan real estate market, however we will only be aware of that once the moment has passed.
[quote=“Rotalsnart”]
I think the Taipei City real estate market is a weird market, but weird in discernable ways, and I think the prevailing local culture and psychology are going to keep it that way for quite a while longer. Nevertheless, it is still important to keep an eye on the fundamentals as you point out.[/quote]
Local culture is to buy land as a store of value. People stop doing that when the following things happen:
The store of value falls in value so bad that they do not dare.
The general mood turns bearish.
The invstors run out of value they want to store.
Land was the preferred store of value in the west until modern financial markets made their entrance, so that was the only game in town until the 1850’s. We used to be the same, however we move away from that. The Taiwanese will do the same over time, that’s already happening.
Actually they can just invest more money overseas again, you can see them buying apartments in Japan and Malaysia etc. I’m talking about investors not people who want to buy a house to live in. Taiwan would seem to offer mostly
Shitty investment opportunities. If I bought a house in my
Home country and rented it I could get 5% yield and capital appreciation with growing pop., here it could be 1-2% with decreasing population.
.)