This, ideally, is not a financial advice thread. I know the pros and cons financially of owning a house, probably not but let’s say I do anyway.
What I’d like to discuss is if it’s actually necessary, and the intangible benefits of owning your own place over renting. For example, I’m renting at the moment, should something happen with work or what have you, I can be out of here in a month and cycling around Taiwan/Japan (ignoring current affairs for hypotheticals). I class that as an intangible benefit.
I read some stats that in my area only 4% of people in my age bracket own where they live, so I’m not alone. And a lot of people maybe can’t afford their rent at the moment let alone saving for a deposit? I have been trying to save for a house as I feel like it’s the “right thing to do” but the saving is a bit detrimental to my enjoyment and also i don’t really see the point in buying a house at the moment (even if I could)
Is there something glaring that i’m missing that you could say and I’d be like “oh right, yeah, then I really need to be sensible, start saving and buy some property asap” apart from the owning of an asset for financial appreciation sake?
Also the general social attitude in Taiwan would be interesting, is coupling off and buying somewhere “the done thing”?
Getting a mortgage in this current low interest rate environment can make sense, especially if you can get a 25 to 30 year mortgage. It makes even more sense when you refinance if you want to use the cash to build or invest in something in the future – like other real estate that you might rent out for income – maybe not in Taiwan but in faster growing real estate markets like Vietnam or the Philippines.
In Taiwan, you can deduct up to 300k a year in mortgage interest.
Whoops. I forgot you don’t want this to be a financial thread. Buying a house is a financial decision and in that way, over the long term, is about freedom from having to pay rental obligations.
Maybe you want to talk about the value in “Pride in Ownership”. Although often cited as a top motivator, it isn’t one for me.
If are able to look ahead over a lifetime (30 years, a marriage, kids), and can imagine yourself collecting rent from your property in Taiwan long after you have moved your own base overseas, keeping open the possibility that you could come back once or twice to live here again - then owning a place can make sense.
But the high cost of real estate in major cities makes saving for the deposit hard to justify. Also, first time mortgages are steep for non-citizens - higher deposits and (sometimes) higher interest rates.
A lot depends on where you want to buy, and if it’s to live in or for investment. Personally I see little benefit to buying right now, at least not in Taipei. The housing market is still very inflated and you’re likely to see values drop.
Thanks, you make a good point about the financials, which are valid, but at the same time wouldn’t be a big motivator for me. I’m not considering buying anywhere in Taiwan, sadly. Would love to though, but this would be in my country, the UK. (also ignoring the general madness going on over here at the moment)
I’m a single person and I can only imagine that if anything changes in my life, whether that be work, family or love life, then I’m going to move. So buying a place seems detrimental on my perceived “freedom”
I agree, you should see my car. I’ve never washed it.
Another benefit for me for renting is that they have inspections every few months, so I have to keep things relatively sane. If I owned this place I’d have all the walls down already.
But thinking more generally, surely in Taiwan you must have the same problem as over here, where average wages aren’t sufficient to cover house purchase due to the prices being high? Resulting in an inevitable generation of renters?
I have heard that property values have become, say, more affordable given recent circumstances in the UK
Plus, buying property in the UK as a source of passive income is a well-known strategy in Asia.
But you are talking about owning the place you live in. That’s a very different thing.
For me, the main lure of ownership there would be eventual financial freedom but that will mean 5 to 15 years of struggle to get there, and potentially locking you down there for much of that time.
Ultimately, it’s a case-by-case matter and a quite personal one at that.
Nope, still going mental, yet millions are out of work.
Indeed, it’s this bit which is the puzzle. Perhaps it’s a personal thing. Unless there’s any reason why renting and not buying, or vice versa, is going to be hugely detrimental to quality of life, I guess either way it’s what you make of it.
One big reason to buy is that you can renovate the thing to your liking, most places in Taipei (and presumably rest of Taiwan) are crap.
You do after all spend quite a lot of time at home(especially if you work from home), so you will kind of want the space to be more than just a box you sleep in
Leverage is the key factor, but only if the market is strong (ie. prices going up)
Let’s say you put down a 20% down payment and the value of the property goes up by 10% (not a guarantee, but certainly possible - median home prices in the Phoenix and Seattle areas both up ~11% in the past year). You’ve now made a 50% return which is extremely difficult to do without leverage. And while it’s certainly possible for the value of the property to go down, it doesn’t very often and usually not by a lot so there’s a very advantageous risk/reward profile. Really can’t think of any other investment vehicle with the potential for a 50% return without the risk of a 50% loss
Also depending on what interest rate you can get on the mortgage, could work out to be cheaper than renting as well
There’s a lot of intangible benefits to owning as well. Just depends on how stable you want to be. Right now you’re young and you don’t seem to value the stability.
As soon as I started having kids I bought a place. Before that I was happy to rent. But while raising kids I don’t want to be displaced by rising rents or be subject to the whims of a landlord.
Bought my house in the U.S. in 2016, it’s already gained USD $150,000 in value in this booming market. So the financial considerations can be significant.
If you are a TW citizen, then owning your own house means you can freely register your household where you live without having to get your landlord’s permission (the document required can only be provided by the owner of the address). There’s lots of bureaucracy in this and while you can register at rented locations, you require a notarized lease which 99% of all landlords will not provide because this means the rent is on the books, and landlords in Taiwan evade taxes like crazy.
Also there is no unsecured bank loans in Taiwan apart from credit cards. Every bank loans in Taiwan is refinance, or something like a car loan where the car (or machinery) is owned by the bank, and when you don’t pay the bank takes it. A cash loan is obviously unsecured and banks want something they can take if you don’t pay, which means a house.
But the problem is housing market in Taiwan is bloated, and the rule makes it hard for newcomers to buy due to mandatory down payments (before you could buy with zero money down if you could accept less favorable terms). House payment will be typically 3x rent for equivalent property unless you can get a 100 year mortgage (it ain’t happening). Rent is low because income is low. That means a house should only cost a third of what they are now.
People really shouldn’t be taking an unsecured loan to use as a deposit anyway. I don’t think this is allowed in the US (though there may be ways around this). If I recall correctly, you need show the source of funds for the deposit. For my first ever home purchase, the deposit came from my father… bank asked that he write a note confirming that it is a “gift” and not a “loan”
The house payment most certainly will be higher than the rent payment but what I think many people miss is that this is not comparing apples-to-apples. You need to compare the rent to the interest portion of the house payment. This should be comparable (depends on how much down payment you placed and the interest rate). With a large down payment, this should be considerably lower than the rent
As for availability of unsecured personal loans, HSBC provided me with a personal line of credit which I don’t think was secured by anything (don’t know since I never used it and never bothered to ask about it, they just gave it to me)
I am close to buying. For living. Yes people always talk about the ‘investment’ side and ask, what if the price goes down and you sell it and you lose money? But the rent I am paying now has a 0% return. For me, if I buy something small and replace my rental payments with this, then I get SOMETHING back when it’s time to move on.
This is true. Banks are so scared of even small loans like 100k unsecured, super stingy. They like giving to SMEs that have collateral. Compared to north american banks that throw money to all and sundry. Two extremes.
That said I can see the draw of buying because a lot of landlords won’t rent to foreigners and of the ones who do, probably won’t want to rent to me as I get older. Plus the lack of stability it shows to society as someone who is irresponsible , especially in a place like Taiwan. Most parents won’t let their daughter marry a guy that doesn’t own a house either.
This does not sound typical to me. At least not typical for condos I’ve bought in Taipei (Daan, Shilin) or New Taipei (Xindian) in the last 15 years. In the 90s, I rented all over Taipei and New Taipei - initially a room in shared apartments in my first 5 years and then later on my own tiny little places (sometimes with no windows, sometimes with a view of a major offramp so it was noisy all the time). Before I was married, I moved over a dozen times, usually to be closer to wherever I worked.
When I finally did buy an apartment (2005), I was engaged, my dad put down the down payment, and my fiance qualified for a first time homeowner package (interest free for the first 3 years) promoted by the Taipei City government. I refinanced that 3 years later with a 20 year mortgage.
From my observation, mortgage payments did not exceed twice (2x) what similar rentals were priced in units in the same building - and we’re usually much less.
I am not doubting you saw mortgage payments priced at 3x a comparable rental unit, I just don’t think that is “typical”. Especially in the past 5 years.
It would be interesting to know more about your sources. Mine are few and based on personal observations in only Taipei and New Taipei over the past 25 years.
It seems like property prices haven’t been aligned with reality for quite a while. They make a good investment if you can turn them into a place that makes income. Like growing mushrooms or renting out rooms or both. At a certain age it might become cheaper to rent rather than own. This also depends on whether you have kids or the relationship with your direct family. So you could own as an investment while renting something cheaper and more suitable for your needs if there’s nothing tying you to having a castle to store your heirlooms. With property prices moving further and further away from average earnings and becoming more and more the kind of tax reducing investment (even Ma Ying Jiou tried to bring in negative gearing in Taiwan) the harder it becomes for people working at places like carefour or 7/11 to be able to afford to buy. It’s like having a rather large percentage of the population stuck in quicksand.
Damn… that’s pretty much the same thing as giving you free rent for three years!
And yea, that whole house payment = 3x rent… the math is not really that difficult (look up mortgage calculator on Google). A ton of variables go into this, it CAN be 3x if say you’re buying a place that is 3x the value of the place you’re renting and say putting down only 10% (in this case the mortgage payment is probably more than 3x the rent). Comparing mortgage payment vs rent payment without looking at all the other variables has absolutely zero meaning
It really drives me friggin nuts when people just refer the the monthly mortgage payment without referencing the terms and leverage. That number really means absolutely nothing (ok, it does mean something with regards to your ability to make those payments)
