Tapei house prices go through the roof

building construction The financial burden of buying a house in Taipei City, Taiwan's largest city in the north, hit a record high in the first quarter of this year, with prices averaging more that 10 years of a buyer's full annual earnings, according to the results of a survey published May 29 by a research body. Chang Chin-oh, a professor at the Department of Land Economics of National Chengchi University which was in charge of the survey, said the calculation represented an unprecedented high for home ownership in Taipei City. In the neighboring Taipei County, a house cost in Q1 the equivalent of 7.8 times a buyer's annual income, according to the study carried out by the Institute for Physical Planning and Information during the first half of April. In Taichung City and Taichung County in central Taiwan, the ratio stood at 6.7 times a buyer's yearly income. In Taoyuan and Hsinchu counties in the north it was 6 times, and in Kaohsiung City and Kaohsiung County in southern Taiwan the ratio was 5.6. Nationwide, house prices in the first quarter were 7.5 times buyers' full annual earnings, a significant increase from the 6.6 ratio in the previous year, Chang said. At the same time, the survey found that housing loan principals in Taipei City also rose to a new high of 43.6 per cent of the buyers' monthly incomes in the first three months of this year, indicating that the living standards of home owners might be affected by such high loans. The problem might be much more serious than it appears on the surface, as people who cannot afford to buy a house were not included in the survey, Chang warned. According to a report issued in late April by the institute, a housing bubble is already looming in Taiwan, particularly in Taipei City. Residential property prices in Taipei City have surged by 50 per cent over the past three years, while average local household income has grown by only 2 per cent over the same period -- a stunning contrast that shows housing prices have irrationally outpaced local residents' earnings, the report stated. In the first quarter of this year, the average price per ping (3.305 square meters) for pre-sold houses in Taipei City reached NT$530,000 (US$17,377), the report noted. Some economists believe that the overheated housing market caused by speculation over possible Chinese investment and the popularity of real estate as an investment to fight inflation have artificially pushed up residential property prices by about 30 per cent.