Housing prices too high: survey

UNREASONABLE::A poll by the Construction and Planning Agency found mortgage payments took up almost 44% of household income in Taipei and 31.2% elsewhere

By Crystal Hsu  /  Staff reporter

Fri, Dec 24, 2010 - Page 12

A majority of Taiwanese consider home prices unreasonably high after the mortgage-to-household-income ratio hit a record in Taipei City in the third quarter as prices surged to their highest level in eight years, a government survey released yesterday found.

Prices of newly purchased homes averaged NT$12.35 million (US$405,117) per unit, about 11 times the annual household income in Taipei, the Construction and Planning Agency’s survey found.

Prices have risen to NT$420,000 per ping (3.3m2) the previous high was set in the second quarter of 2002, the survey showed.

Mortgage payments accounted for 43.8 percent of household income in the capital and 31.2 percent for the rest of the country, the survey showed.

“The burdens led 60 percent of respondents in Taipei City and New Taipei City to describe home prices as unreasonable,” said Chang Chin-oh (張金鶚), a land economics professor at National Chengchi University, who helped organize the survey.

Housing prices averaged NT$7.5 million, or 8.9 times household income in New Taipei City (formerly Taipei County), with mortgage payments taking up 34.6 percent, the second-highest after Taipei home owners, the survey said.

The increasing burdens led 70 percent of respondents in New Taipei City to consider home prices unreasonable, the survey said.

Nearly 40 percent of new homebuyers dismissed links between the rising housing prices and Taiwan’s signing of an Economic Cooperation Framework Agreement (ECFA) with China in June, the survey said. The rest considered the pact a mixed blessing.

“The findings indicated reported benefits from ECFA are exaggerated,” Chang said, urging developers and real estate agencies to show restraint in pricing properties.

A majority of the respondents, 53.8 percent, said their home purchases were for their own use, while 18.5 percent cited investment, the survey said.

Chang said the survey showed that the central bank’s tightening measures aimed at cooling down the housing sector have been futile. He suggested the central bank and other regulators take stronger action if they are serious about reining in soaring prices.

The central bank will hold its quarterly board meeting next Thursday to review interest rates and other monetary policy.