As income growth continues to lag behind rising housing prices, an increasing number of people are pushing back the age at which they purchase their first home. That is because they must spend more time to earn enough money for a down payment. The average age for first-time home buyers was 30 to 35 in the first quarter of 2013, but for the same period this year it ranged from 35 to 40, Evertrust Rehouse said last week, citing data compiled by the Joint Credit Information Center.
The brokerage also said that the average price of a home purchased by people aged 35 to 40 in the first quarter of this year was NT$11.54 million (US$385,360), NT$4.13 million more than the NT$7.41 million that the same age group spent nine years earlier. However, the floor area of properties purchased by this age group had shrunk by 2.1 ping (6.94m2) to 43.6 ping on average this year, from 45.7 ping in 2013.
In addition, 22 percent of people taking out a mortgage in the first quarter of 2013 were aged 30 to 35, but in the first quarter of this year, primary mortgage takers were aged 35 to 40, accounting for 19 percent of the total, and those aged 50 and older, or 20 percent, the brokerage said, citing the center’s data.
People aged 50 and older have become the primary demographic taking new mortgages, the analysis shows. This phenomenon reflects that people aged 50 and older have sufficient wealth for property purchases, want to purchase properties given that homes are tangible assets that retain value amid global economic changes or choose to transfer some assets to real estate to hand down to their children.
Indeed, people aged 50 and older tend to have a stable income with a good credit record, so it is not unusual that they would become the main demographic taking out mortgages. However, an important takeaway from the data is that if real-estate prices continue to climb faster than wage growth, young adults would face more difficulty buying homes before the age of 35, and the average age for mortgage holders would also likely continue to grow. People who cannot save for a down payment early in life are having greater trouble affording homes, but even when borrowing money to buy a home, rising prices mean heavier mortgage burdens and lower affordability.
Unaffordable housing in Taiwan has been a top public grievance for many years, and the ratio of housing prices to family incomes confirms the trend of deteriorating affordability. Based on data released by the Ministry of the Interior early this month, Taiwanese home prices averaged 9.58 times household income in the first quarter of the year, the highest since the ministry began collecting such data in 2002. Meanwhile, mortgages accounted for 38.35 percent of household income in the first three months this year, up 0.52 percentage points from the previous quarter and 1.81 percentage points from a year earlier, the data showed.
Difficulty in purchasing a home is a crucial factor that keeps people from marrying, and deters young couples from having children, which then affects consumption, investment and production. The government must fulfill its promises to make housing more affordable, or this issue could have a deleterious effect on the nation’s economy and society, to the extent that it evolves into a national security issue.
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