Housing boom likely to continue, as far as market analysts can tell

This article was written by Graham Norris and published by the Taiwan Journal on December 2, 2005. According to statistics provided by the Ministry of Interior, the number of real-estate brokers had increased 40 percent in 2004, and would likely increase another 30 percent in 2005.

However, there is concern that in 2006 the supply of new housing would exceed demand by as much as 30 percent. Various signs have shown that the market for residential property has slowed. It is likely that the market for commercial property used as office space has also slowed.

According to statistics provided by the Institute for Physical Planning and Information, the average selling price for a home in Taiwan was US$169,000, and its average size about 1,300 square feet. The statistics also show that the busy residents of northern Taiwan's Taipei County generally spend only three-and-half months searching for a new place to live, nearly two-thirds of them requiring the help of real-estate brokers. In contrast, residents of central Taiwan's Taichung County are more laid-back and spend more than six months hunting down their dream home, with less than 40 percent of them needing help from brokers.

The article points out that it is quite hard for market analysts to predict, so buyers probably need to adopt a wait-and-see attitude. Several factors contributed to this unpredictability. For example, increasing construction costs and rising interest rates are affecting the ability of construction companies to put up more housing units.

The article also points out that although investment purchases have weakened in 2005, demand from consumers for new homes is still strong. Indeed, statistics show that first-time buyers make up about half of the property market, with people moving house making up the remainder. "With supply frequently outstripping demand, particularly in central and southern Taiwan, the prices of new homes have fallen significantly. The price differential between new and older residences is now so small that many buyers prefer to buy new properties that, in theory, have a longer lifespan," this article concludes.

Finally, this article explains several policies the government in Taiwan has enacted in recent years, in order to increase home ownership and to give the construction industry a boost.