Are you buying a house here or there?

Traveller,

Everybody’s circumstances differ, of course.

The issue in Taiwan is that there is so much empty housing it is a renters paradise. As I mentioned in my earlier post I live in a 15 million dollar property for 20,000 NT per month. So in the case of my landlord he is committing financial suicide renting this property to me. Since you live in Neihu your welcome to drop by for a beer and see for yourself.

Most people renting in Taiwan are paying substantially less than what the mortgage repayment rate would be on a property. Most people I know pay about 10 to 24 thousand in rent for three bedroom apartments with book values of 6 million NT dollars or more. Without subsidized loans these places would have mortgage rates of 30 to 35000 as I mentioned in my previous post. Longterm interest rate assumptions of 7% are very reasonable. Ask any financial planner what they estimate the interest rate to be long term and they will say 7%. It is a rule the thumb. Of course it maybe less or more, but it will probably trend around this figure. I don’t know why this is.

I’m not suggesting you put your money in the bank to achieve your 7% on your deposit. Bank interest is low. However, it is a reasonable investment goal to achieve 7% on your on investments each year.

I’m pleased your happy with your investment. That’s the only way to be about a house. You might well have made a good choice and it seems like you have if you can contain your mortgage payments to 19,000. So good luck. I hope you can get more capital gain. It’s always possible as you are in a good location.

However, on the issue of subsidized mortgage loans, there is only one reason the government would be offering subsidized housing loans, and that is that the market favors renters and it is likely ultimately to lead to loan defaults by building contactors of unoccupied apartment blocks. This in turn will lead to even more pressure on the banking system in Taiwan which already suffers from high levels of loan defaults. The banking sector lives in fear of having to write down their bad loans, and the government lives in fear of them doing it.

Point taken Guys, it seems such a long time since i even had to worry about renting that i have got very out of touch. Did not mean to stand on any Brushes.(Fox send me a mail as i cant send you one, re getting together)

But i will still say that if people are staying for the long term then buying is the only really sensible option.

As for buying there but paying from here, then people may well find it difficult to obtain mortgages in their own countries whilst earning their salaries outside. Mortgage Companies and Banks etc just do not like it, to many unknown factors.

Amos, do you not know any Taiwanese who own property in the States?? There’s alot of them. Most tend to buy real estate in California and New York.

Thyrdrail, I realise that, but I’m trying to get an idea from people who are in a similar boat to me. You know - mid 20’s, handsome, chalkies by trade and enjoying a pretty comfy living here, yet eventually will head back home to the greener pastures

I bought a place back home, rent it out, and send the occasional extra wedge of cash back to get the mortgage paid off even faster.

Buying here seems crazy when the rentals are so low in comparion to the (ever declining) capital values. The government is trying all kinds of things to stimulate the market (subsidized loans, reduced capital gains tax, etc.). This is enough to tell you that the market is still in serious decline.

Buying at home is very likely to be financially better. You may not make spectacular gains, but you are avoiding some very significant risks.

In any case, you say that you are planning to eventually return home anyway. That should clinch it really.

I doubt you will have much trouble getting a mortage back home even if you are working over here. I didn’t even have a job and they still lent to me.

Amos, do you teach English? Do most here teach English?

Kiwi, that’s the way I’m looking. I’m curious, how much are your tenants rent payments compared to your bank repayments.

Thydrail, the majority of ‘European’ foreigners here are chalkies, and yep I’m just another.

My plan is to sneak back to Aus in November to see what the house market is doing. Problem is, Australia’s property boom hasn’t plateaued yet. So the average house in a not too bad suburb in Melbourne for example, would still slug you around $A320,000+ (about $US170,000 I guess).

I suppose what I’m generally trying to find out is this. I know there are literally thousands of people like me here in Taiwan, early / late 20’s or 30’s, and pulling in a nice consistent salary. So assuming most are saving for a house, how many have started doing anything? Out of these same people, has anyone done what Kiwi has done. As that’s what I reckon I’ll do. I’m just looking to get some general experiences.

Amos, the details are as follows:

Purchase price NZ$256k
Mortgage NZ$125k (my deposit was rather large - probably one reason the bank lent to me despite me having no job at the time)

Rent: NZ$450/week (gross) = 22.5k/year (gross)

However, net rental after expenses (rates, mantenance, and management by a rental agency) is only 15.8k/year

Mortgage (split into two parts):
1 - 100k 15 year mortgage, currently at 7.3% fixed for 3 years = repayments of $423.55/fortnight (this payment inculdes roughly $140/fortnight of principal, with the remainder being interest)

2 - 25k interest only loan at a floating rate (around 7%). I only have to pay the interest on this loan, meaning a monthly payment of $150 or so.

Basically the large deposit means that the repayments are easily covered by the rental.

The net rental yield is not that flash, only a shade over 6%. However it would be significantly higher (just under 7%) if I was back home and could manage the property myself rather than using an agent.

The difference between between your rental income and repayments is basically going to depend on the size of your deposit relative to purchase price, plus the type of property you buy.

You can buy with a smaller deposit relative to purchase price and still cover repayments if you look outside Australsia. For example, UK interest rates are significantly lower than Australasia, while rental yields are significantly higher (in London maybe 8-10% rental yields, and only 5-6% mortgage rates).

So although Australasia looks good in comparison to Taiwan, the UK could be even better in some respects. The recent housing boom has certainly been much stronger in the UK and US than in NZ and OZ.

On the other hand, you would be wise to stick to buying in an area you know well, and you know Australia. When you know the area it is far easier to immagine what a prospective tennant is likely to be looking for in a house (and what they will pay). Besides, you eventually plan to go back to Australia and live, so you may as well buy there.

Hope that helps.

Maybe this has been previously stated but 14 pages of crap is not something i’m going to scroll through.
First, Taiwanese ar not subject to capital gains tax in the U.S. - actually, they are not subject to ANY tax in the U.S.
Next, they are, for the most part, not subject to capital Gains tax in Taiwan. Why?
If I work and get paid, I pay my income tax, usually at 13%
But what if my job is buying and selling stock. I make a profit. Capital gain and I go home with no tax obligation. Same, for the most part, with houses. Buying and selling with a profit garnishes no taxable income for the country.
Recently Mr. Chang Shen-Ford, a personal friend BTW, came out of retirement, at the rquest of the president and has presented several proposals. I am a bit angry that not one of the capital gains proposals mentions taxing the gains at the taxpayers normal marginal rate.
Tops in Taiwan, as I recall is 40%.
Hell, U.S. is much higher. Sorry! I dont want to make comparisons. My point is that rich fuckers in this country (my country) want to rake in the bucks and fuck the small folks. To you rich fucks: step up to the plate and pay your share.
My apologies to Mr. Chang. He has a hard row to hoe.
EDIT: I’m NOT drunk all the time but I try. Mostly because of this kind of shit.

Enigma,

Are you certain that you posted in the correct forum? This thread is supposed to be about buying houses in our home countries vs. buying a shitty condo in Taiwan.

Also, you DID see that the date of the last post was 2002 and NOT 2012, right? :roflmao:

That’s the biggest grave dig I’ve seen in a while. A 10 year old grave dig!

Congratulations! :bravo: