Wed, Aug 25, 2010 - Page 12 News List

House prices outpace disposable income

By Yu-huay Sun  /  BLOOMBERG

Taipei’s average existing-home prices relative to annual disposable income climbed to the highest in two decades as salary increases stalled, according to local broker Sinyi Realty Co (信義房屋).

Home prices rose to 11 times projected annual disposable household incomes, said Stanley Su (蘇啟榮), a senior researcher at Sinyi. A 30 ping home cost NT$14.31 million (US$447,700) in Taipei City during the period from January to this month, 17 percent higher than the average for last year, Su said. The disposable household income in the city may average NT$1.35 million this year, based on the statistics bureau’s data, he said.

“The high ratio is unnerving; that’s why the central bank imposed selected credit controls on properties,” Su said in a telephone interview yesterday. “It’s hard to buy a house.”

The central bank introduced in June a 70 percent cap on loans for second homes in the Taipei ­metropolitan area and canceled grace periods on principal repayments to curb speculation. Taiwan’s average disposable household income fell 2.9 percent last year, after declining 1.1 percent in 2008, the statistics bureau said last week.

The acceptable ratio of home price to annual disposable household income, which excludes taxes and mandatory insurance, is six to eight times, Su said. A ping, a standard measure of space in Taiwan, equals 3.3m².

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