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will there be a drop in housing prices?

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Re: will there be a drop in housing prices?

Postby Taffy » 25 Apr 2012, 14:09

bismarck wrote:No idea about ping, mate. It's about 12x7 meters. Two floors.

That's around 50 ping. Nice.
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Re: will there be a drop in housing prices?

Postby cranky laowai » 25 Apr 2012, 14:39

Taffy wrote:
bismarck wrote:No idea about ping, mate. It's about 12x7 meters. Two floors.

That's around 50 ping. Nice.

Since this is a stand-alone place or one without other apartments in the building (right?), those 50 ping would probably be the equivalent of at least a nominally 70 ping place in a new building in Taipei or Gaoxiong.
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Re: will there be a drop in housing prices?

Postby Incubus » 25 Apr 2012, 15:06

bismarck wrote:Yeah, I think I'll just wait a while and then cash in on the "blood in the streets" to finally own my own home. The house I live in, the uncle has already come down from 3.5 million to "chabuduo" 3 million. If he gets down to 2.5 million I'll go for it, because I reckon I'm going to have to pump about 0.5-1 million on renovations anyway.

You see, it is precisely this kind of thinking that the bubble is not going to burst, because as soon as the prices start to go south, there's going to be takers, especially in Taipei city. People here aren't broke. They've got the cash. They're just biding their time and waiting for a good deal. Don't be surprised when the property is sold for 2.6 million. :doh: I would gobble it up when you see first sign of blood on the sidewalk, cuz it ain't gonna make it to the street my friend.
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Re: will there be a drop in housing prices?

Postby Milkybar_Kid » 25 Apr 2012, 22:55

Help! My wife wants us to buy a house.

After getting married last year my wifes family is putting a lot of pressure on us to buy our own house. She also doesn't like our current rental accommodation and wants a place of her own.

However as has been discussed on here the housing market here is absolutely crazy. Even here in Kaohsiung with its pitiful salaries house prices are still far too high.

My biggest problem is paying so much money for something so small, old and crap. I don't want to buy an apartment because of the monthly service charges which are bound to increase with inflation. I would like to buy a house in one of the counties because it is quieter but then you have the problem of having to commute to the city for work.

I'm also scared of borrowing so much money from the bank. Teaching English is not a profession that is not going to last another 20 years in Taiwan so how can we borrow money for 20 years?

Every Taiwanese person I speak to says that its so easy, if you don't like the house just sell it and make some money. Has Taiwan never experienced a property market crash? Surely the situation in China will spread to Taiwan at sometime.

Is there anyway we can buy strategically? We have combined savings of $NT300,000 which I guess is not enough for a deposit.

My wife says that if I don't want to buy a house she will buy it herself, saddle herself up with massive debts and I can pay her a monthly rental fee. Crazy shit.
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Re: will there be a drop in housing prices?

Postby GuyInTaiwan » 26 Apr 2012, 08:29

Milkybar: What you need to do is two things.

Firstly, you need to have a credible investment source (probably outside Taiwan) where you could have a good estimate of its long term return (you could just look at an index fund if you wanted to do this simply).

Secondly, you need to show people, be it your wife or her family, a rent vs buy scenario as follows. Basically, look at how much it would cost to buy a house. By this I mean the mortgage payments, taxes (at the time of purchase and also ongoing), insurance, maintenance, etc. All the extras other than just the mortgage repayments. Then, subtract the rent you would pay for a similar place from that. Next, imagine you invested the difference. Calculate the growth of those investments over a ten year period, for instance, and then say to them that that number is how much better off you would be if you rented instead of bought.

Of course, if they're that set on owning real estate, then you probably won't be able to convince them no matter what you do. There's rarely a solution for dealing with the irrational. I feel for you.
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Re: will there be a drop in housing prices?

Postby *monkey* » 26 Apr 2012, 10:50

GuyInTaiwan wrote:Firstly, you need to have a credible investment source (probably outside Taiwan) where you could have a good estimate of its long term return (you could just look at an index fund if you wanted to do this simply).

Secondly, you need to show people, be it your wife or her family, a rent vs buy scenario as follows. Basically, look at how much it would cost to buy a house. By this I mean the mortgage payments, taxes (at the time of purchase and also ongoing), insurance, maintenance, etc. All the extras other than just the mortgage repayments. Then, subtract the rent you would pay for a similar place from that. Next, imagine you invested the difference. Calculate the growth of those investments over a ten year period, for instance, and then say to them that that number is how much better off you would be if you rented instead of bought.


GIT, that's a really Spock-like analysis of home ownership. :eek:

Mortgage repayments on an average sized apartment outside Taipei are typically similar to the rent you would pay on a similar sized apartment in Taipei City.

Additional expenses of home ownership over renting (taxes, insurance, maintenance etc) are negligible.

I had spent almost NT$1 million on rental expenses before I got my own place. I sorely wish I could do it all over again, only putting that NT$1 million into home equity and not into some greedy landlord's pocket.
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Re: will there be a drop in housing prices?

Postby GuyInTaiwan » 26 Apr 2012, 11:30

monkey: I think you need to check your assumptions again.

For instance, I previously rented an apartment in Taoyuan. At the time, I was told that such an apartment would sell for 3 million NTD. My rent, including the security fee, was about 10,000NTD/month and it didn't increase in the 2.5 years I was there.

In such a scenario, if I were to put a deposit of 20% down, I'd still need to borrow 2.4 million NTD. I could probably get that at about 3%. So, for a twenty year loan, my payments would have been 13,310NTD/month. However, we need to look at all the associated costs, including maintenance costs (and they're a lot higher than being negligible -- in the 2.5 years I was there, the landlady had to replace one air-conditioning unit, and fix one other, replace a refrigerator, fix a toilet, and paint the walls, and there was also some sort of rotting plaster or something from the humidity that she was going to have to deal with, plus several cracks in walls). I have no idea what those costs would have been, but I don't think it's totally unreasonable to expect that all up, they could have made her total cost of ownership to be 20,000NTD/month once we factor in taxes and insurance also.

So, then you'd have to look at the long term trends for the potential growth of that property's value and compare it to the long term trends with the stock market. As far as I know, the stock market is the best performing asset class. So, theoretically, you could take that difference of 10,000NTD/month (sure, rent would go up, but so would the costs of maintaining the typically poorly built homes in this country) and after twenty years, cash part of your investments in and still have excess money.

In my present situation, living in rural Taidong, I'm not expecting housing to increase a lot. I could be wrong. We're currently considering buying the place we live in, but only because we think it could probably generate at least a minor amount of income to eliminate the rental advantage. If that weren't a good possibility, I wouldn't even be considering buying the place, and here's why. Based upon our current rent, the asking price (and mortgage repayments), additional costs, capital growth of 5% (and I'm not even sure it would grow that fast around here) and the returns I've been getting on my investments, the decision to buy the place instead of renting it (or something like it) would leave me almost $300,000 (USD -- based upon Taiwan's inflation rate for the past decade, about $200,000 in today's terms) poorer after 20 years. Or, to put it another way, after twenty years, I could buy a house like my current house (in its current condition) and still have all that extra money in my bank account. If I didn't want to do that, I'd have several multiples of that amount and could continue to pay rent.

People always hold up some sort of maxim that owning a home is better than paying rent. In a lot of cases, probably, but not always, and not even close to always. In Taiwan, it often doesn't make sense to buy unless you have other, non-financial concerns.
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Re: will there be a drop in housing prices?

Postby Incubus » 26 Apr 2012, 12:10

Milkybar_Kid wrote: I don't want to buy an apartment because of the monthly service charges which are bound to increase with inflation. I would like to buy a house in one of the counties because it is quieter but then you have the problem of having to commute to the city for work.

I for one would be more than happy to pay a monthly service charge so someone can take care of my trash, mail, the water I use, and keep an eye out for shady characters. Currently I have to do all that by myself and it is a chore. As for quiet neighborhoods, I don't know about K-town, but in Taipei, some of the quietest neighborhoods are right in the middle of the city, tucked away behind tall buildings with small oases of parks and quiet lanes in them. I'd never give this up for the burbs.
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Re: will there be a drop in housing prices?

Postby GC Rider » 26 Apr 2012, 13:42

*monkey* wrote:I had spent almost NT$1 million on rental expenses before I got my own place. I sorely wish I could do it all over again, only putting that NT$1 million into home equity and not into some greedy landlord's pocket.

Why is the landlord greedy just because he wants you to pay rent? He's probably just a smart investor.
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will there be a drop in housing prices?

Postby headhonchoII » 26 Apr 2012, 14:16

Owning a house you can do what you want to it and you can get some tax rebates too. In Taiwan Hukou is based on house ownership in reality, it is just the way it is here.

Owning a house is nice if you can afford it. Just make sure you can afford to pay the loan longterm and it can be sold or rented out if you need to move somewhere else.
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