Taiwan house prices now at record-breaking 9.35 times average annual income

This undated photo shows an aerial view of Taipei City. The city is home to some of the most expensive real estate in the country.
PHOTO: Internet

The price-to-income ratio, a number that indicates the price of purchasing real estate as a multiple of annual household income, is now at 9.35, an all-time high, according to the Construction and Planning Agency of the Ministry of the Interior.

The situation is even more dire in the Greater Taipei area, with Taipei seeing a price-to-income ratio of 15.47 and New Taipei of 12.7.

The agency released its data for housing affordability for the third quarter of 2016 on Monday, which found a price-to-income ratio that experts would find unacceptable.

Experts have previously stated that property prices that were 5 to 7 times the average household income for the purchase of a 30-ping new property were at a reasonable ratio.

The price-to-income ratio was 0.37 times what it was the

revious quarter and 0.82 times what it was during the same period the previous year, according to local media reports.

Explaining the Numbers

At 9.35, people would, on average, have to spend no money for 9.35 years to have enough money saved to buy a house outright.

The report further found that the national mortgage burden rate has reached 38.94 per cent, which means that people are using 38.94 per cent of their monthly salaries to pay off their mortgage.

The burden rate went up by 1.35 percentage points, marking a 2.4 percentage point increase from the previous quarter.

In contrast, the housing affordability index took a dip compared to the prior quarter, which the Construction and Planning Agency explained was due to the larger and newer properties that were on the market in the third quarter.

The agency categorized 20 major cities and counties in the country based on the ability of residents to afford properties in the area. Penghu and Taitung were not categorized due to a lack of data.

The agency found that only five places, including Keelung City, Yunlin County, Chiayi City, Chiayi County, and Pingtung County, had a housing affordability index that was reasonable.

Eleven places, including Taichung City, Hsinchu County, Kaohsiung City, Changhua County, Taoyuan City, Yilan County, Hsinchu City, Hualien County, Nantou County, Tainan City, and Miaoli County, were classified as places where ability to afford real estate prices was at a slightly lower level.

At the extreme were Taipei and New Taipei City, both of which are classified as extremely low in terms of their residents ability to afford a house in their markets.

According to the agency, these places have been fixed for quite some time, implying a stable trend for each region'sreal estate market.

More about