Sky is falling for prime property prices

By Kuan-lin Liu, The China Post

The value of a luxury apartment in Dazhi has dropped by half its original price amid the slipping property value of other buildings and apartments in greater Taipei.

According to a Taiwan Realty statement released Wednesday, a top-of-the-market Dazhi luxury apartment sold recently for NT$1.445 million per ping (3.3 square meters) last December, whereas it sold for 50.28 percent more, at NT$2.906 million, at its peak.

Another luxury apartment in Zhongzheng District experienced a similar drop in prices, with Ministry of the Interior records showing that it sold for NT$1.079 million per ping last year. This marked a new low for the apartment complex, down 9.63 percent from a previous low of NT$1.194 million per ping.

These drops come with a greater wave of drops in residential real estate prices in greater Taipei, with the monthly House Price Index (HPI) dropping to a figure similar to what it was four years ago. The House Price Index Leading realty company Sinyi Realty found in its January monthly HPI report that HPI, which measures the price changes of residential housing, dropped to 119.84 in greater Taipei, almost the same as the HPI of 119.21 back in March of 2013.

The current HPI is the lowest it has been since the rebound of the housing market, with some netizens joking that if the HPI gets any lower, “everyone can afford a place in Daan District.” Daan District has traditionally been one of the most expensive districts in Taipei City.

A closer look at Sinyi Realty’s report finds that the January HPIs were 115.64 for Taipei City (a month-on-month decrease of 0.2 percent and a year-on-year decrease of 2.5 percent) and 126.2 for New Taipei City (a month-on-month decrease of 1.6 percent and a year-on-year decrease of 2.7 percent).

While the drop in both property value and HPI are seen as a good sign for buyers in the market, it also means, as some have pointed out, that those who bought off-plan property back in 2013 will be posting a loss.

This is of course because of the payments they have already made for their purchases, which with the looks of prices now, were more than what they would have had to pay had they bought later on. Not the Right Time to Buy

Senior analyst Chen Ping-chen (陳炳辰) at Taiwan Realty advised people looking to invest in the luxury housing market to hold off, saying that “the time is not here yet.” According to experts, prices for non-luxury apartments should fall even more back to the level seen in 2005.

According to HouseFun News’s Cho Hui-hua (卓煇華), the current property value to household income should fall by about 35 percent before the public thinks that property prices are reasonable.

Currently, the ratio shows that property values are 15 times the average household income, whereas both domestic and overseas experts believe that a reasonable ratio would place property prices at 5 to 7 times that average household income for the purchase of a 30-ping new property.