Taiwan real estate priced over income levels

Taiwan has high property price-to-income ratio

Taipei, Taiwan

TAIPEI (Taiwan News) – Many younger Taiwanese cannot afford to buy property due to their low wages. This, despite the decline in residential property prices over the past few quarters.

According to the Taiwan Ratings (中華信評), credit analyst Patty Wang (王佩齡)  says there will be a moderate decline in prices over the next one to two years.

However, the problem is low wages. This makes a high property price-to-income ratio. Daniel Hsiao (蕭黎明), a credit analyst with Taiwan Ratings says that this poses a major risk to the local property market in the long term and thus will also affect the banking sector.

The housing price-to-income ratio for the third quarter of 2016 in Taiwan hit a record high of 9.4, with Taipei posting the highest ratio at 15.5, followed by 12.7 in New Taipei. Taipei remains one of the most expensive cities in the world to buy property, mainly due to low wages. Taipei’s property price-to-income ratio stood between 15 and 17 in 2015. The ratio in Taipei is far higher than the 4.5-5 in Singapore and Tokyo and approaching the 18.1 recorded in Hong Kong.

 

The property price to income ratio is the ratio compared to the cost of a typical upscale housing unit of 100 square meters as against the GDP per capita. This ratio will be much higher in low-income countries than in high-income countries and Taiwan is a perfect example.