It’s great to find a blog about Taiwan that is interested in some of the things I am about Taiwan life. Today I’m recommending Taoyuan Nights which includes lots of great posts on a wide range of topics: Finance, Taiwan, UK, etc. I enjoyed his skeptical treatment of the local real estate market which I found in a discussion on Forumosa about local property prices dropping. On that point, I could be wrong but I don’t think so. I’m pretty bullish on local property prices and don’t think that they are totally out of whack except in obvious hotspot areas. The pot really hasn’t boiled over in many other suburban or southern areas at all, so there is still some considerable upside.
I’m going to take a different stance on this: property prices are soft right now, that’s for sure. But you have to balance this against a number of other factors: a population that’s expected to increase to 30 million in twenty years or less. Family sizes are likely shrinking due to divorce, etc. as is the case in the US and in the UK.
However, I would caution against expecting prices to fall much, this market is not a property bubble in the same way as the US/AUS/UK/etc. markets are… In fact, it seems that the government is trying to squeeze the air out of the market by requiring even new houses to have a 30% downpayment. When we bought our place in 2000, it was only 20% downpayment for a new house.
Also, in the three years after we bought our place, property prices were at the bottom of the cycle here in Taiwan. Recently, prices have buoyed significantly in many areas, but the jump in prices isn’t as great as in US/UK/Aus.
I would reckon that the Taiwanese property market is very much at the end of the first stage of the next property boom in Asia, a boom that HongKong and China have already experienced. We’re on the upwards escalator, perhaps halfway up, just as the US is on the downwards escalator.
Whatever your position, you’ll enjoy Taoyuan Nights very much. Go there.
Hello,
This is Mu from Taoyuan Nights. Thanks very much for your kind words and your link to my site.
I've written a little reply over on my blog.
All the best, and happy new year!
Mu
Hi, Mu! I'm really pleased to hear from you. I'm adding your blog to my blogroll here and on InvestorBlogger. Your writing really makes me think about things. You're more pessimistic than I am about things… But I'm by nature an optimist! So I can't help myself! BTW, I couldn't leave any linkylove on your blog. Did you remove the commenting?
Hi, Mu! I'm really pleased to hear from you. I am adding your blog to my blogroll here and on InvestorBlogger. Your writing really makes me think about things. You are more pessimistic than I am about things… But I'm by nature an optimist! So I cannot help myself! BTW, I couldn't leave any linkylove on your blog. Did you remove the commenting?
[...] Taiwanese blog called Obblogatory kindly linked to my blog, and raised some views on housing in Taiwan. First of all – thanks for [...]
Hello again,
I don't allow comments on my blog, for a variety of reasons including spam. I prefer to respond 'blog to blog' as much as possible.
I'm not a pessimist. I'm an optimist! I'm looking forward to a world (including Taiwan) where people don't obsess about their worth in terms of how a pile of bricks is valued; where a family can choose to have an extra room AND have a child; where people don't need to trade their entire working life to own a small, 2-bedroom apartment in nowhere-ville.
In fact, dropping prices is great even for owners! It means you will be able to trade up to an even nicer house, if you like, more cheaply. The world would be a much nicer place if house prices were considerably lower. The only people that gain from high house prices are landowners, housebuilders, very old people (who downsize), banks, estate agents and the government (through taxation). Most people don't fall into one of these categories.
Besides, housing is not a measure of wealth. A country's wealth comes from it's productive ability in terms of tools, art, ideas, … housing is just a (poorly) assembled collection of mud and dead trees. People would hardly go screaming with joy around the streets if food prices doubled, or if water charges tripled, or electricity bills quadrupled. So why should anyone be cheerful when some other basic, needed commodity goes up? It's bad news for everyone except those who make that commodity or benefit from its trade!
For me, the pessimists are those who think that high house prices are good, when really they tie up the capital of a society in a completely unproductive way, and transfer wealth from young to old in an entirely unfair and disproportionate way.
Anyway, my view on what will happen to housing is not coloured by what I would *like* to happen to housing or what I think is best for society. Rather, it's just based on what history shows us, and the 'laws of finance', as far as they seem to exist.
Well, six months have now passed. and property prices have weakened in our area. Headline rates are off about 10% since the peak last summer (based on my estimates) but in our area at least, we're still waiting for the predicted 50% cut price sale. I think we'll have to hold our breathe for quite some time. It ain't going to happen.