Real-estate prices have continued to go through the roof, as the property market remains bullish. Statistics released by the Ministry of the Interior showed that 3.15 million properties exchanged hands last year, rising by 21,605, or 6.62 percent, from the previous year, prompting the ministry to introduce amendments to crack down on speculation.
Investing in the housing market has become just a dream, because selling property can be heartrending, and anyone currently sitting on a property, using it as their home and waiting for a time when prices would rise to sell it would be waiting for a long time, Cushman & Wakefield Taiwan general manager Billy Yen (顏炳立) has said.
I could not agree more with this assessment: The following two metrics suggest that we are sitting in a housing bubble that could burst at any time.
First, for the past two years, mortgages accounted for more than 40 percent of GDP — a ratio internationally recognized as a warning sign of a housing bubble.
Data from the central bank and the Directorate-General of Budget, Accounting and Statistics (DGBAS) showed that in December 2020, home mortgages totaled more than NT$8 trillion (US$286.8 billion at the current exchange rate), which was 40.64 percent of that year’s GDP of about NT$19.8 trillion.
Adding in construction loans of just under NT$2.5 trillion would raise the total amount of loans to about NT$10.5 trillion, accounting for 53.07 percent of GDP.
Despite the central bank’s implementation of selective credit-control measures, home mortgages climbed to more than NT$8.8 trillion in December last year, accounting for 40.66 percent of that year’s GDP of NT$21.65 trillion.
Again, adding in construction loans of more than NT$2.8 trillion, total loans would be NT$11.6 trillion, or 53.63 percent of GDP.
Central bank Governor Yang Chin-long’s (楊金龍) concern over surging property loans is understandable, including why he decided to expand selective credit controls.
The second factor is housing supply continues to rise, while the population is falling. A DGBAS population and housing survey for 2020 showed a record number of vacant homes of 1.66 million.
Ministry figures showed that 104,872 residential building permits and 170,465 construction permits were issued last year for a total of 275,337. If this is multiplied by the average of 2.88 people per family, as per the ministry’s calculations, the new housings could accommodate more than 792,000 people. This figure does not even include the 98,260 housing permits issued in 2020.
When the population is falling and there is a housing surplus, what is left is a housing bubble.
The housing market has had its ups and downs: In the late 1980s, when the stock market was booming, housing prices soared. However, when the housing market collapsed in the late 1990s, homeowners were left unable to pay their mortgages, leading to a massive number of properties being placed under the hammer for horribly low bids.
My house in Nantou County is next to a congregate housing complex built in the 1990s, when it sold for NT$100,000 per ping (3.3m2); in the early 2000s, a considerable number of these properties were put up for auction, fetching only NT$30,000 per ping.
This should come as a warning for anyone thinking of purchasing a house in the current climate.
Wang Juei-hsing is a former head of the Taiwan Provincial Government’s Land Development Division.
Translated by Paul Cooper
Concerns that the US might abandon Taiwan are often overstated. While US President Donald Trump’s handling of Ukraine raised unease in Taiwan, it is crucial to recognize that Taiwan is not Ukraine. Under Trump, the US views Ukraine largely as a European problem, whereas the Indo-Pacific region remains its primary geopolitical focus. Taipei holds immense strategic value for Washington and is unlikely to be treated as a bargaining chip in US-China relations. Trump’s vision of “making America great again” would be directly undermined by any move to abandon Taiwan. Despite the rhetoric of “America First,” the Trump administration understands the necessity of
US President Donald Trump’s challenge to domestic American economic-political priorities, and abroad to the global balance of power, are not a threat to the security of Taiwan. Trump’s success can go far to contain the real threat — the Chinese Communist Party’s (CCP) surge to hegemony — while offering expanded defensive opportunities for Taiwan. In a stunning affirmation of the CCP policy of “forceful reunification,” an obscene euphemism for the invasion of Taiwan and the destruction of its democracy, on March 13, 2024, the People’s Liberation Army’s (PLA) used Chinese social media platforms to show the first-time linkage of three new
If you had a vision of the future where China did not dominate the global car industry, you can kiss those dreams goodbye. That is because US President Donald Trump’s promised 25 percent tariff on auto imports takes an ax to the only bits of the emerging electric vehicle (EV) supply chain that are not already dominated by Beijing. The biggest losers when the levies take effect this week would be Japan and South Korea. They account for one-third of the cars imported into the US, and as much as two-thirds of those imported from outside North America. (Mexico and Canada, while
The military is conducting its annual Han Kuang exercises in phases. The minister of national defense recently said that this year’s scenarios would simulate defending the nation against possible actions the Chinese People’s Liberation Army (PLA) might take in an invasion of Taiwan, making the threat of a speculated Chinese invasion in 2027 a heated agenda item again. That year, also referred to as the “Davidson window,” is named after then-US Indo-Pacific Command Admiral Philip Davidson, who in 2021 warned that Chinese President Xi Jinping (習近平) had instructed the PLA to be ready to invade Taiwan by 2027. Xi in 2017
RSS