will there be a drop in housing prices?

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will there be a drop in housing prices?

Postby rocky raccoon » 08 Aug 2008, 00:17

So I came across this article and was wondering if anyone thinks the writer is making a valid point: http://www.taoyuan-nights.com/archives/220

It seems to me he's saying that housing prices have been overvalued. Hence there's somewhat of a real estate bubble. The analogy of how property prices have risen disproportionately to salaries kinda convinces me. But I'm not experienced and don't any property (but might make push to save more/faster if I can buy low in the next couple of years).

Just curious to know what others think about this.
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Postby sulavaca » 08 Aug 2008, 09:33

Well I hate to tell everyone and all the estate agents that "I told you so," but I did and property prices in Taiwan have fallen for the past three months now, which it seems no estate agent but one were able to predict, or perhaps they were just fooling themselves.

House prices down: stock turmoil, higher rates

I did get the timing slightly out however as I predicted the end of 2008 would see the first drops, on the back of increased debt and the inability for most families to take on more.

This is a long time coming for Taiwan and a deserved correction. People have been gabbing about how links with China will sell houses to the rich elite, but nobody seems to appreciate that there's not much point in purchasing a house here when you can only live in it for thirty days under present restrictions to the majority of Chinese visitors. That and the simple fact that not enough rich business Chinese to support the housing market would be able to physically go to and from local airports without causing stoppages.
It's a good thing that rich Chinese are inhibited from purchasing property here anyway. For some odd reason Taiwanese were joyful at the hopes of fresh investment into the housing sector to raise prices, but it would inevitably be Taiwanese first in this case who would be priced out, and unable to make first time buys.
So it seems to me foolishness has been key to maintaining fresh hope for Taiwan's future market rises, and not realism.
Hopefully prices will continue to fall, allowing new first time buyers into the market, as well as reduce the financial pressures many families have been forced into in the long term.
It may also be a wake up call to locals that property is best suited as a habitat, not a stock market commodity.
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Postby Taffy » 08 Aug 2008, 09:59

I do wonder whether this is just a greater Taipei phenomenon (or maybe a Big City phenomenon) - prices in (for example) Tainan City seem pretty reasonable. A few months ago I saw brand-new one-bedroom flats (not studios) on Gongyuan South Road going for under a million, with parking. Doesn't sound inflated to me, considering Tainan salaries. Though a big correction even just in Taipei would be nice for those of us who wouldn't mind getting on the property ladder.
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Postby rocky raccoon » 08 Aug 2008, 10:00

Great info sulavaca!

sulavaca wrote:For some odd reason Taiwanese were joyful at the hopes of fresh investment into the housing sector to raise prices...


It's like the ones that are already "in" the game want theirs to keep going up.

sulavaca wrote:So it seems to me foolishness has been key to maintaining fresh hope for Taiwan's future market rises, and not realism.


Ah yes, the 1-step ahead vs. the 3-step ahead approach. I'm not much of an forecaster, but it would seem that having a steady long-term raise in housing prices would be more attractive than a quick run to the top.

sulavaca wrote:Hopefully prices will continue to fall, allowing new first time buyers into the market, as well as reduce the financial pressures many families have been forced into in the long term.
It may also be a wake up call to locals that property is best suited as a habitat, not a stock market commodity.


Amen to that! I'd consider making a long(er) stay in Taiwan I felt that an investment in property would provide adequate financial stability. Maybe for many Taiwanese they don't have much of a choice (or if they do they already made it) but as a foreigner with other options out there it does make me think.

For example, do I try and wait and buy in Taiwan at the bottom of the cycle here, or try and do the same in the States? Not sure if that's a decision I will soon need to make, but it is certainly something that crosses my mind.
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Postby sulavaca » 08 Aug 2008, 10:17

rocky raccoon wrote:For example, do I try and wait and buy in Taiwan at the bottom of the cycle here, or try and do the same in the States? Not sure if that's a decision I will soon need to make, but it is certainly something that crosses my mind.


If I were you and didn't mind where I ended up living, I would go with the states. Americans generally have a much more predictable business environment and housing cycle. Taiwan has typhoons, earthquakes, stock market crashes and Chinese to contend with, let alone its own political misgivings. All which make any long term investment a potential powder keg waiting for just the right spark.

Money for money, again I don't understand where the value is in a Taipei property as opposed to an equally expensive property in the states, Europe, Australia, New Zealand etc either. It's always baffled me as to why certain properties are so sought after here. I could pay the same back home in the U.K. and have a place three times the size with no cockroaches, binlang spit, 30 years of built up crud on every surface, stray dogs, dangerous traffic and rude people. Then again, I probably wouldn't have a 7-11 though.


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Of course there are much more beautiful places around Taiwan than Taipei, but again I wouldn't fancy daily conversations about turnips or the rising price of kaoliang for the rest of by life.
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Postby rocky raccoon » 08 Aug 2008, 11:29

sulavaca wrote:Money for money, again I don't understand where the value is in a Taipei property as opposed to an equally expensive property in the states, Europe, Australia, New Zealand etc either. It's always baffled me as to why certain properties are so sought after here. I could pay the same back home in the U.K. and have a place three times the size with no cockroaches, binlang spit, 30 years of built up crud on every surface, stray dogs, dangerous traffic and rude people. Then again, I probably wouldn't have a 7-11 though.


Yep. Money for money, pound for pound, there's more to get overseas. No 7-11? It's okay cause you could plant a garden or something. :)

sulavaca wrote:Image


Nice pic, it reminds me of the time I visited Worcestershire, nice rolling hills and probably great bike riding trails...but only when it's sunny! :)

So anyone care to share why they decided to invest in Taiwan's property market? I guess it would definitely be more interesting* to live here long term. I'm sure there are valuable reasons (family, steady growth, Mandarin) that have prompted others to "take the plunge".

*Interesting...that's the adjective I hear most when people first visit Taiwan.
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Postby Omniloquacious » 08 Aug 2008, 12:18

I am currently actively looking to buy a new place because (a) we need somewhere bigger and (b) we want to live closer to the parents-in-laws and sisters-in-law, so they can help us look after our baby. So we're looking to move to Linkou from Xindian.

Yes, Linkou is a nasty shithole, while Xindian is as good a place to live as anywhere in Taipei County, and before the baby came I wouldn't have considered such a move even if I'd been offered a free house in Linkou. But the baby makes all the difference.

Now Linkou is currently undergoing massive development, with literally hundreds of new housing projects going up on a large flat expanse of what used to be agricultural land. It's going to have a couple of MRT stations a few years ahead and, with some half-decent urban planning, might be quite an acceptable place to live when all the development is done - though still far inferior to Xindian and many other parts of Taipei County.

We're ideally looking for one of those new row houses with good security in a quiet area away from the main roads. They do exist, because the parents-in-law and one of the sisters-in-law both live in prime examples, and having stayed in both, I'd be quite happy to live in either. Unfortunately, those places are very hard to come by, and the prices are prohibitively high, running from the low-teen to high-teen millions for about 70 ping. We're still hoping we might find a 50-odd ping one for about 9 million, but those are few and far between.

So we're also looking at apartments, and have been visiting various of these new projects (either newly finished or still under construction) each Saturday when we spend the day with the in-laws. But the prices they're asking just seem so nonsensical, totally out of touch with reality. For very basic, fairly cramped, 3-bedroom places with an underground parking space, we've been quoted prices of 11 or 12 million - sans interior decoration! Considering that there are tens of thousands of these new homes looking to attract buyers, I just don't see how they can possibly hope to sell them at such prices. How can there be that many Taiwanese with that much money to spend on very ordinary smallish apartments in such a location? We're talking about US$400,000 - and even in the bubble markets in the US, UK and elsewhere, you can still buy something a hell of a lot better than these apartments for much less than that. The only one that was more or less acceptably priced was a 44-ping place which, after deduction of the 25%+ public space, had about 32 pings of interior space, and was available for about NT$7 million, including a parking space. Unfortunately, it faces onto a busy road, is diagonally across from a petrol station, and is surrounded by empty sites where more high-rises are going to be built over the next couple of years - so absolutely not the kind of environment I'm looking for.

When I agreed with the wife that we'd look for a place in Linkou, I set a maximum budget of NT$9 million, fully expecting to be able to find either a fairly nice place for much less than that or a very nice place for that full amount. I can hardly believe that it's difficult to find a modest little home for US$300,000 in as unappealing a place as Linkou.

So I, for one, will be really strongly hoping for a major downward correction in these absurdly inflated housing prices.
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Postby sulavaca » 08 Aug 2008, 15:52

It's odd, I don't know if its relavent, but I just heard on ICRT that 32 percent of Taiwan's men feel they don't want to have kids because they don't believe in the Taiwan education system as valuable to children. Now I've always been of this opinion although I've heard foreigners say they hink their kids should at least learn about their island's culture through its education system.
Does this make a difference to foreigners thinking of long term root setting?

I've also been interested in gaining an understanding of the broad long term ex pat's opinions of living here, as judging by my close circle of friends, it seems the longer they live here, the more they wish to eventually leave.
Am I right in assuming that foreigners who have stayed for shorter than 5 years tend to have ambitions of staying here longer than the longer term, more experienced ex-pat? It also seems to me that Americans find Taiwan more acceptable than Europeans, or perhaps I'm being snobby?!
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Postby Poagao » 08 Aug 2008, 17:14

I bought my place 4 or 5 years ago for over 3 million, saw an ad recently for the same apartment (different floor) for almost 6 million. After reading that article, I'm glad I got a fixed interest rate on my loan, though, so I don't have to worry about rising interest rates, at least.
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Postby Mucha Man » 08 Aug 2008, 18:22

Omniloquacious wrote:I am currently actively looking to buy a new place because (a) we need somewhere bigger and (b) we want to live closer to the parents-in-laws and sisters-in-law, so they can help us look after our baby. So we're looking to move to Linkou from Xindian (Xindian).

Yes, Linkou is a nasty shithole, while Xindian (Xindian) is as good a place to live as anywhere in Taipei County, and before the baby came I wouldn't have considered such a move even if I'd been offered a free house in Linkou. But the baby makes all the difference.

Now Linkou is currently undergoing massive development, with literally hundreds of new housing projects going up on a large flat expanse of what used to be agricultural land. It's going to have a couple of MRT stations a few years ahead and, with some half-decent urban planning, might be quite an acceptable place to live when all the development is done - though still far inferior to Xindian (Xindian) and many other parts of Taipei County.

We're ideally looking for one of those new row houses with good security in a quiet area away from the main roads. They do exist, because the parents-in-law and one of the sisters-in-law both live in prime examples, and having stayed in both, I'd be quite happy to live in either. Unfortunately, those places are very hard to come by, and the prices are prohibitively high, running from the low-teen to high-teen millions for about 70 ping. We're still hoping we might find a 50-odd ping one for about 9 million, but those are few and far between.

So we're also looking at apartments, and have been visiting various of these new projects (either newly finished or still under construction) each Saturday when we spend the day with the in-laws. But the prices they're asking just seem so nonsensical, totally out of touch with reality. For very basic, fairly cramped, 3-bedroom places with an underground parking space, we've been quoted prices of 11 or 12 million - sans interior decoration! Considering that there are tens of thousands of these new homes looking to attract buyers, I just don't see how they can possibly hope to sell them at such prices. How can there be that many Taiwanese with that much money to spend on very ordinary smallish apartments in such a location? We're talking about US$400,000 - and even in the bubble markets in the US, UK and elsewhere, you can still buy something a hell of a lot better than these apartments for much less than that. The only one that was more or less acceptably priced was a 44-ping place which, after deduction of the 25%+ public space, had about 32 pings of interior space, and was available for about NT$7 million, including a parking space. Unfortunately, it faces onto a busy road, is diagonally across from a petrol station, and is surrounded by empty sites where more high-rises are going to be built over the next couple of years - so absolutely not the kind of environment I'm looking for.

When I agreed with the wife that we'd look for a place in Linkou, I set a maximum budget of NT$9 million, fully expecting to be able to find either a fairly nice place for much less than that or a very nice place for that full amount. I can hardly believe that it's difficult to find a modest little home for US$300,000 in as unappealing a place as Linkou.

So I, for one, will be really strongly hoping for a major downward correction in these absurdly inflated housing prices.


Good lord, Omni, that's an absolutely daft idea on all levels. You love where you live and the quick access to the rivers and mountains is a great source of joy for you every day. You want to share that joy with your new child. Moving to Linkou is going to make you unhappy, which is not good for the child, to say nothing of her missing out on forming a deep bond wiht nature at the earliest times possible.

In addition, Linkou is a shithole as you say and the KMT in their wisdom are expanding the coal generators out there which means even more air pollution. How can a shithole with bad air, far removed from nature, be a better place to raise your child?
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