Housing affordability grew worse in the first quarter, as the average mortgage burden climbed by 0.52 percentage points to 38.35 percent nationwide, a report released yesterday by the Ministry of the Interior showed.
The data suggest that mortgages accounted for a big chunk of the disposable income of households on average and this would worsen after the central bank raised interest rates twice and increased the mortgage burden by 1.5 percent.
The ministry classifies mortgage burdens as follows: below 30 percent, reasonable; higher than 30 percent, slightly high; more than 40 percent, relatively high; and more than 50 percent, overly high.
Photo: Lam Yik Fei, Bloomberg
Mortgage burdens in Taipei constituted 64.91 percent of household incomes, retreating from 65.09 percent three months earlier as housing prices became less expensive at 16.22 times the average household income, the ministry said.
Mortgage burden in New Taipei City ranked second at 51.45 percent, gaining 1.43 percentage points from the preceding quarter, the ministry said.
During the first three months of the year, mortgage burden rose by 1.58 percentage points to 45.08 percent of household income in Taichung, where housing prices were 11.26 times the average household income, the ministry said.
Meanwhile, Yilan, Hsinchu and Changhua counties, as well as Tainan and Kaohsiung, all saw mortgage burdens surpass 35 percent, but the figure in Taoyuan declined a fractional 0.26 percentage points to 31.5 percent.
Keelung, Chiayi County and Yunlin County are among the few in Taiwan where the mortgage burden remained below the reasonable threshold of 30 percent, the ministry found.
The report also showed that the home price index, which gauges fluctuations in residential property values in the nation, rose 2.99 percent from a quarter earlier to 121.01 in the first quarter.
The ministry attributed the increase to robust economic growth, low interest rates and inflationary expectations.
In the January-to-March period, Kaohsiung and Taichung saw the largest increase in the home price sub-index among the six special municipalities, rising 4.7 percent and 3.65 percent respectively from the preceding quarter, data showed.
The sub-indices for Taoyuan and Taipei saw the lowest increases of 2.7 percent and 1.91 percent respectively, the data showed.
Analysts said housing price changes would not affect the mortgage burden of existing homeowners even though price corrections might mitigate the burden of new borrowers.
Despite headwinds ahead for the market, housing prices would hold firm, because sellers believe property is a good defense against inflation and economic upheavals, they said.
Additional reporting by CNA
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