Property prices in Taipei skyrocketing
Christina Lo
Taiwan Correspondent
Channel NewsAsia
Taipei, Taiwan
Friday, 18 September 2009, 0028 hrs
Taiwan property
"To Let" or "For Sale" signboards were everywhere in Taipei when the global financial crisis hit in the fourth quarter last year.
The real estate industry was among the most badly affected. Weak demand for residential property and office space also caused a sharp fall in prices.
But a year later,
property prices in Taipei have
skyrocketed, while home sales in the West are still experiencing a slump.
Professor Chang Chin-eh, Land Administration Department, National Chengchi University, said: "The financial crisis should have lowered housing prices. It actually did for a while, but
large sums of capital kept coming in as everyone expected greater cross-strait relations."
Low interest rates have also boosted demand and attracted speculators to the property market.
"Houses have become popular investment tools. News reports encourage people to put money into housing market since the interest rate is low. So, the prices go up," said Prof Chang.
Residing in Metropolitan Taipei is not easy. A housing magazine's survey has showed that Taipei citizens will have to work over 23 years, without spending on eating or drinking, if they want to save up for a three-bedroom apartment.
A 100-square metre home costs about US$630,000 in the Taiwanese capital – a huge sum, considering that the average income of people in their early 30s is just over US$2,000 a month.
One said: "It's a huge gap. It's difficult to buy a house for a family that only makes US$1,600 per month."
"The rich will get richer. They have more chances to invest, but the middle-class might suffer from limited income," another added.
Prof Chang said: "You will become a mortgage slave if you buy an overpriced house. It's a heavy burden if you buy it. In Taiwan, there are too many over-consumption and over-investment. It's not healthy."
Property prices are expected to
go up by another
20 to 30% in the
next two to three years.
Analysts said if nothing is done about it, continued strong demand could lead to over-inflated prices, developing into a housing bubble.