Real-estate prices have continued to go through the roof, as the property market remains bullish. Statistics released by the Ministry of the Interior showed that 3.15 million properties exchanged hands last year, rising by 21,605, or 6.62 percent, from the previous year, prompting the ministry to introduce amendments to crack down on speculation.
Investing in the housing market has become just a dream, because selling property can be heartrending, and anyone currently sitting on a property, using it as their home and waiting for a time when prices would rise to sell it would be waiting for a long time, Cushman & Wakefield Taiwan general manager Billy Yen (顏炳立) has said.
I could not agree more with this assessment: The following two metrics suggest that we are sitting in a housing bubble that could burst at any time.
First, for the past two years, mortgages accounted for more than 40 percent of GDP — a ratio internationally recognized as a warning sign of a housing bubble.
Data from the central bank and the Directorate-General of Budget, Accounting and Statistics (DGBAS) showed that in December 2020, home mortgages totaled more than NT$8 trillion (US$286.8 billion at the current exchange rate), which was 40.64 percent of that year’s GDP of about NT$19.8 trillion.
Adding in construction loans of just under NT$2.5 trillion would raise the total amount of loans to about NT$10.5 trillion, accounting for 53.07 percent of GDP.
Despite the central bank’s implementation of selective credit-control measures, home mortgages climbed to more than NT$8.8 trillion in December last year, accounting for 40.66 percent of that year’s GDP of NT$21.65 trillion.
Again, adding in construction loans of more than NT$2.8 trillion, total loans would be NT$11.6 trillion, or 53.63 percent of GDP.
Central bank Governor Yang Chin-long’s (楊金龍) concern over surging property loans is understandable, including why he decided to expand selective credit controls.
The second factor is housing supply continues to rise, while the population is falling. A DGBAS population and housing survey for 2020 showed a record number of vacant homes of 1.66 million.
Ministry figures showed that 104,872 residential building permits and 170,465 construction permits were issued last year for a total of 275,337. If this is multiplied by the average of 2.88 people per family, as per the ministry’s calculations, the new housings could accommodate more than 792,000 people. This figure does not even include the 98,260 housing permits issued in 2020.
When the population is falling and there is a housing surplus, what is left is a housing bubble.
The housing market has had its ups and downs: In the late 1980s, when the stock market was booming, housing prices soared. However, when the housing market collapsed in the late 1990s, homeowners were left unable to pay their mortgages, leading to a massive number of properties being placed under the hammer for horribly low bids.
My house in Nantou County is next to a congregate housing complex built in the 1990s, when it sold for NT$100,000 per ping (3.3m2); in the early 2000s, a considerable number of these properties were put up for auction, fetching only NT$30,000 per ping.
This should come as a warning for anyone thinking of purchasing a house in the current climate.
Wang Juei-hsing is a former head of the Taiwan Provincial Government’s Land Development Division.
Translated by Paul Cooper
Could Asia be on the verge of a new wave of nuclear proliferation? A look back at the early history of the North Atlantic Treaty Organization (NATO), which recently celebrated its 75th anniversary, illuminates some reasons for concern in the Indo-Pacific today. US Secretary of Defense Lloyd Austin recently described NATO as “the most powerful and successful alliance in history,” but the organization’s early years were not without challenges. At its inception, the signing of the North Atlantic Treaty marked a sea change in American strategic thinking. The United States had been intent on withdrawing from Europe in the years following
My wife and I spent the week in the interior of Taiwan where Shuyuan spent her childhood. In that town there is a street that functions as an open farmer’s market. Walk along that street, as Shuyuan did yesterday, and it is next to impossible to come home empty-handed. Some mangoes that looked vaguely like others we had seen around here ended up on our table. Shuyuan told how she had bought them from a little old farmer woman from the countryside who said the mangoes were from a very old tree she had on her property. The big surprise
The issue of China’s overcapacity has drawn greater global attention recently, with US Secretary of the Treasury Janet Yellen urging Beijing to address its excess production in key industries during her visit to China last week. Meanwhile in Brussels, European Commission President Ursula von der Leyen last week said that Europe must have a tough talk with China on its perceived overcapacity and unfair trade practices. The remarks by Yellen and Von der Leyen come as China’s economy is undergoing a painful transition. Beijing is trying to steer the world’s second-largest economy out of a COVID-19 slump, the property crisis and
As former president Ma Ying-jeou (馬英九) wrapped up his visit to the People’s Republic of China, he received his share of attention. Certainly, the trip must be seen within the full context of Ma’s life, that is, his eight-year presidency, the Sunflower movement and his failed Economic Cooperation Framework Agreement, as well as his eight years as Taipei mayor with its posturing, accusations of money laundering, and ups and downs. Through all that, basic questions stand out: “What drives Ma? What is his end game?” Having observed and commented on Ma for decades, it is all ironically reminiscent of former US president Harry