Housing affordability remains low, especially in Taipei, although home prices dropped modestly, a report issued on Thursday by the Ministry of the Interior’s Construction and Planning Agency showed.
Home prices in the capital constituted 15.18 times the national average household income in the final quarter of last year, easing slightly from three months earlier and a year earlier, the report said.
The figure means a family would have to save all of its income for more than 15 years to be able to buy a house in Taipei, the report said.
Houses elsewhere are more affordable, but still represented a heavy burden, with the affordability index at 12.61 in New Taipei City, indicating that home prices were 12.61 times the average household income, it said.
Home prices nationwide were 9.32 times household income late last year, down from 9.35 the previous quarter.
Despite the drop, unaffordability remains a serious issue, as a reasonable home price-to-income ratio is between 4 and 6, said Linda Chou (周美伶), who teaches land economics at Takming University of Science and Technology.
Higher ratios would translate into heavy debt burdens and deprive home owners of a decent quality of life, Chou said.
While only home prices in Pingtung County, Chiayi and Keelung fall within the ideal range, the affordability index remains tolerable at below 10 in most other administrative districts, with the exception of Taipei and New Taipei City, she said.
Ratios larger than 10 spell tremendous financial misery for homeowners, turning them into “slaves,” Chou said.
Likewise, mortgage payments constituted 38.34 percent of household income, but were 62.48 percent in Taipei and 51.91 percent in New Taipei City, the report said.
A mortgage burden of more than 30 percent would start to squeeze the quality of living, while burdens higher than 50 percent would likely mean no life at all, Chou said.
Mortgage payments eat away 40.14 percent of household incomes in Taichung, the report said, adding that the burden is the lightest in Keelung at 23.15 percent.
Meanwhile, the home price index fell to a two-year low of 113.38 in the final quarter of last year, a 1.57 percent correction from a peak in the first quarter of 2014, a separate report showed.
Deputy Minister of the Interior Hua Ching-chun (花敬群) said the finding confirmed a fall in house prices in most parts of the nation and the correction might continue this year.
Of the six special municipalities, house prices in Taichung saw the biggest retreat, falling 1.87 percent, but they held firm in Taoyuan, the report said.
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