Instead of the speculative threads on whether and when housing prices will drop, I’ve found myself wondering lately how exactly foreign workers in TW could afford property without being a hedge fund manager. My in-laws are wonderful and have never given me pressure to buy a home (I would tell them in no uncertain terms that I have zero intention of doing so) but I recognize I’m the minority here. Crunching the numbers…
Let’s assume a foreign office worker has an average paycheck of 55,000+ over the months and years he/she is saving up for a down payment on a home. If the worker manages to save half of that each month (which is really kind of impressive in my book), it would translate to NT$330,000 of savings a year, meaning three years just to accumulate NT$1m. If the down payment is 20% of the cost of the home, that could only buy a parking spot in Taipei. So it would take six years of saving at that salary level to get NT$2m (so NT$10m) which could buy a very very small home in Taipei or something reasonable elsewhere.
My question for F’mosans who own their own place: Did you really spend that long saving to get there? That sounds like a huge sacrifice in your quality of life because of your inability to spend on other things (clothes, food, electronics, trips) while saving up. (Or maybe I’m grossly underestimating how much most people make while saving up for a down payment?)
My wife and I bought our house over four years ago (I’m starting to lose track of exactly when). We bought our apartment in Xinbei for 6 million. We didn’t have enough for the down payment. I borrowed some from my parents and my older brother (who was doing really well back then) actually gave me some money. After two years, the house had gone up in value so we re-mortgaged the place (actually, I sold it to my wife is how we did it, but it could have been done in several different ways). I paid back my parents in full with basically what was the increase in value of the property. That’s how I did it. It was stressful as hell, but we somehow made it happen by begging, taking, and using the insight and connections of a guy in real estate who goes to our church. I personally think that we’re in a correction right now, but things will head upward again after a year or two. In other words, if I’m right, it would be possible to repeat what my wife and I did.
** Correction, it was just over six years ago that we bought the place. **
To answer the OP’s question, no, most foreigners cannot afford to buy homes in Taipei (Yes, for other parts of Taiwan). I think marasan is lucky that he entered the market 6 years ago, but at this juncture, it’s just a lost cause. But why buy when renting is so much cheaper and there are so many rentals on the market to choose from? The apartment I live in right now would sell for $30m. There’s no way I can afford that, but I’m living in it because I can afford the rent. Not only that, I can still salt away some money every month after all the expenses are paid, money that can be spent on several overseas vacations a year rather than on a home mortgage.
Right now, at this moment, it’s doable if you’re not in Taipei.
If you’re in Taipei, however, unless you have a juicy expat pack, you’re far better off renting a place. Even if you have the money, you’re paying A LOT of money to get grossly overpriced apartments which are mostly old (new ones are much more expensive, even). And there’s another thing with real estate here: most older houses have been through a lot of earthquakes, which means that the wear and tear of the buildings is higher than in other countries. Unless you’re getting a flat in a self-contained, earthquake-resistant building, you’re better off renting, and when the building has to be torn off, jump ship.
Not to mention that prices are getting lower. If you really want to buy, wait until the right moment comes (which will be in about two or three years from now).
As a clarification, I’m not interested in buying. Not even if I won the lotto. I’m just curious about other people’s experiences, particularly in terms of how “comfortable” or “uncomfortable” it was. Special thanks to marasan for the insights.
We bought our apartment in Danshui about six years ago (this is on a full-time university lecturer salary plus a typical Taiwanese office worker salary). Two main factors: I’d been working and saving in Tainan for 5-6 years before that, and with the rents there, it was possible to save a far higher percentage of my income than I can in Taipei; and second, my parents helped with the down payment. We were planning to buy anyway, and probably would have done so a year or two later, but parental assistance made it possible to buy earlier. We paid enough with the down payment that our mortgage now isn’t that much higher than our rent was, although I remain nervous about how much we’d have to fear from an interest rate increase.
If you’ve only ever worked for typical Taiwanese salaries in Taipei, without familial help, I don’t see how it’d be possible to buy in Taipei.
That’s how. You have either parents, inlaws or someone else who can help fork up some cash up front. Sure, there are exceptions, but this is the way the average person has to do it. Once you got that covered, its not so bad to pay the mortgage.
Thats also how Taiwanese people, making typically less salary than a foreigner, do it as well. Heck, my parents back in the states bought a house only because they had help from my mom’s folks for the down payment.
So unless you’re kinda wealthy…you get familial help.
In Taipei, either you have the money or you don’t. That is why even most Taiwanese cannot afford to buy in Taipei.
The question about foreigners doesn’t really apply. Lots of Chinese are buying in Taipei because they have the money and are interested. Foreigners from other countries may have the money but they aren’t interested.
Chinese can put purchase real estate, sure. There are certain restrictions though I think.
I’d say more HKers have bought apts in Taiwan by far.
But Very few properties are owned by foreigners, a lot of overseas Taiwanese invested their money back into Taiwan when tax laws were changed a few years ago.
I have earned okay money over the last few years but still didnt buy due to deposit requirements and the feeling I wasn’t getting value for money. although the main reason I didn’t look to buy in Taichung was the poor job prospects, sure enough I finished there and had to move to Taipei (reluctantly) due to work requirements,I could afford to pay a fair amount for a mortgage now but the large deposit and the job uncertainty makes me uneasy ie I feel uncertain about my income and career prospects in Taiwan, well paid jobs are very hard to find you have to kind of create them yourself due to lack of regional offices etc, there’s a high possibility we will leave as I earn many times what my wife could ever earn here, at least overseas she can earn a lot more…in theory. As Hokk mentioned I am also sick of working in shitty work environments in Taiwan, it’s not a nice place to work for many reasons (its better than Japan…thats about it…).
Finally my career prospects
would do better in a place like UK or China, more opportunities for
moving sideways or upwards.
They call Taipei city ‘tian long gui’ basically ‘heavenly land’ that is not accessible by ordinary people anymore.
[quote=“Markova”][quote=“headhonchoII”]I know many foreigners who have done well here (an yes some
indeed), but I know far more who just squeeze out a living.[/quote]
Just like everywhere. I’m sure most new businesses in Australia are closing down after the first 2 years.
Its actually quite easy for a foreigner to establish a business in Taiwan.[/quote]
Yes, speaking from personal experience it is easy to start a business. It’s hard to succeed though. My wife is working on another one at the moment, her and millions of other Taiwanese . It’s very competitive here. it would be better to be located in China for many export businesses.
Oh, let me add a question to the discussion: current homewowners, do you have any kind of disaster insurance? I know most people in Taiwan don’t because “it’s too expensive,” but this is an earthquake- and landslide-prone island, not to mention the population density increases the chances of fires and, well, propylene gas line explosions.
As to the original question, I would say no. The vast majority of foreigners who live and work in Taiwan would not be able to realistically afford a home, at least in the city. So you are right that it would take several years of saving and pinching pennies to do so. Not impossible, but not a reality for most who live here.
Having said that, I don’t think it even matters. Whether a person can or can’t buy a home I don’t think changes the fact that they shouldn’t. Taiwan is one of the most overpriced housing markets in the world. The rental prices vs purchase price ratio is horrendously skewed, and the only thing that could possibly save it would be if there was a significant increase in wage growth, which isn’t happening. Until wage growth picks up, it’s best to work off the assumption that the housing market is a bubble, and unless something changes it’s only got one way to go.
It’s not a guarantee, and it could just keep going up indefinitely who knows. But for anyone who works quantitatively and bases things on probabilities, the odds are good that renting will turn out to be the better decision over the next 10 years.