Owning a home is growing increasingly difficult for Taiwanese, with heavier mortgage burdens in the first quarter costing more than 50 percent of household income for residents in Taipei and New Taipei City, government data showed.
Mortgage burdens rose to 68.63 percent of household incomes in Taipei and 55.27 percent in New Taipei City during the January-to-March period, far higher than the national average of 35.94 percent and the healthy level of 30 percent, the Construction and Planning Agency said in a report on its Web site.
The latest figures from the Ministry of the Interior agency suggest a decline in affordability as wages gained modestly, but failed to keep pace with soaring house prices.
Nationwide, home prices averaged 8.46 times household incomes in the first quarter, up 0.96 times from a year earlier and 0.05 times from three months earlier, the report said.
The ratio rose sharply to 16.16 times in the capital, representing a 2.04 point increase from the preceding quarter and a 6.76 point increase from a year earlier, the report indicated.
That means it would take a Taipei resident more than 16 years to buy a home, in the absence of other expenses.
Home prices stood at 13.02 times household incomes in New Taipei City, the reports said, indicating that a resident would need to save for more than 13 years to own a home in the absence of other expenses.
“In reality, it would take much longer because people cannot spend all they have on mortgage payments alone,” National Chengchih University land economics professor Chang Chin-oh (張金鶚) said by telephone.
The much-anticipated decline in home prices appear to be isolated incidents so far and more time is necessary for them to become broad-based, Chang said.
Wages also contributed to the increasing unaffordability, Chang said.
According to the Directorate-General of Budget, Accounting and Statistics, monthly take-home wages grew 1.51 percent year-on-year to NT$38,522 (US$1,214) in March, while home prices have soared 80 percent in Taipei since the global financial crisis in 2008, based on Sinyi Realty Inc’s (信義房屋) estimates.
Half of the nation’s 20 cities and counties had mortgage burdens greater than the reasonable 30 percent mark, including Taichung at 36.22 percent, Hsinchu at 35.01 percent, Kaohsiung at 33.46 percent and Yilan County at 31.42 percent, the report said.
Burdens of between 30 percent and 50 percent are considered relatively high and burdens greater than 50 percent are extremely high, the report added.
“The low affordability suggests further room for credit controls if lenders aim to protect their asset quality,” Chang said, as the market is set for a protracted correction amid unfavorable policies.
Reasonable mortgages refer to a 20-year loan of NT$5.09 million with an interest rate of 1.99 percent for households having disposable incomes of NT$60,000 per month, the report said.
Houses meeting the requirements are mostly found in Tainan, Keelung, Miaoli and Changhua, Nantou, Yunlin, Pingtung and Hualien counties, the report said.
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