Owning a house has become increasingly unaffordable in Taipei City in light of soaring prices and falling disposable income for average households, a recent survey by a local real estate service provider found.
From January to this month, a 30 ping (99.18m²) apartment cost about NT$14.31 million (US$44,700), or NT$477,000 per ping, according to Sinyi Realty Co (信義房屋), the nation’s only listed real estate brokerage.
That is about 11.5 times more than the average disposable income of NT$1.25 million for individual households in the city, compared with 9.9 times a year earlier, the report said.
“In the absence of financial help, it is impractical for the average family to buy a house as it would take more than a decade to pay off the mortgage,” Stanley Su (蘇啟榮), a senior researcher at Sinyi said.
Rising housing prices led the central bank to hike interest rates by 12.5 basis points in June as well as introduce selective credit controls in Taipei City and 10 popular areas of Taipei County to help curb rising housing prices.
A rate hike of 12.5 basis points adds an extra NT$47 per month to every NT$1 million of mortgaged money, according to Sinyi’s estimate.
While the central bank’s tightening measures have yet to trigger a notable price correction, housing turnover has dropped 10 percent, signaling residential prices in the Greater Taipei area are unlikely to climb higher in the foreseeable future, Su said.
Nationwide, annual disposable incomes for average households fell 2.9 percent year-on-year to NT$888,000 last year, the lowest level since 2003, data released on Aug. 19 by the Directorate-General of Budget, Accounting and Statistics showed.
An average household consists of 3.34 members with 1.46 of them making regular financial contributions each month, according to the agency.
The figures showed it is even more difficult for residents from other parts of Taiwan to own a house in Taipei City.
Su said he expected more and more people to settle in Taipei County, where an apartment of 30 ping costs an average of NT$6.93 million, based on price data for the first eight months.
The amount, 7.8 times as much as disposable income, is more affordable for average families, the report said, adding that the burden drops further to 3.3 times in Kaohsiung City.
Sinyi advises home owners and potential buyers to brace for higher mortgage burdens as the central bank is likely to raise interest rates by another 12.5 basis points in its quarterly board meeting next month to cool the property sector.
The central bank’s benchmark discount rate remains low at its current 1.375 percent, while the nation’s strong second-quarter GDP growth of 12.53 percent would give the central bank room for further tightening, the brokerage said.
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