Home prices in Taiwan remained on the rise in the third quarter of 2022, resulting in mortgages that continued to take bigger bites of household incomes, according to Ministry of the Interior (MOI) figures.
The home price index, which gauges fluctuations in residential property values in Taiwan, rose 1.90 percent in the third quarter from the previous quarter to 126.33, down from a quarter-on-quarter increase of 2.44 percent in the second quarter, MOI data showed.
On a year-on-year basis, the third quarter home price index rose 10.01 percent, down slightly from the 10.27 percent rise seen in the second quarter, the data showed.
Though Taiwan’s export-oriented economy was hurt during the quarter by weakening global demand, the gradual easing of COVID-19 restrictions boosted consumer spending and domestic economic growth, which, along with rising construction costs, helped push housing prices higher.
Among Taiwan’s six largest cities, Kaohsiung, the biggest city in southern Taiwan, recorded the highest quarter-on-quarter rise in its home price index at 2.76 percent.
The rise resulted primarily from expectations that housing demand would rise due to the construction of new semiconductor fabs in the city by the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co. (TSMC).
Taichung in central Taiwan came in second with 2.31 percent rise in its home price index, ahead of a 2.01 percent rise for New Taipei, Taiwan’s most populous city, a 1.94 percent rise for Tainan, a 1.41 percent rise for Taoyuan and a 0.83 percent rise for Taipei, the MOI said.
As home prices rose, residential property transactions fell 14.99 percent around Taiwan from a quarter earlier to 73,129 units in the third quarter.
Potential buyers became more cautious as Taiwan’s central bank raised key interest rates during the third quarter to tame inflation and the higher housing prices and rates led to mortgages that took a growing chunk out of household income, the MOI said.
In the third quarter, the monthly mortgage payment to household income ratio around Taiwan rose 0.93 percentage points from a quarter earlier to 40.55 percent, according to MOI figures.
Mortgage holders in Taipei had the heaviest financial burden, with their mortgage payment to income ratio rising 0.95 percentage points from the second quarter to 67.07 percent in the third quarter.
It was followed by New Taipei (53.66 percent, up 1.25 percentage points), and Taichung (46.96 percent, up 1.42 percentage points), MOI data showed.
The ratio for mortgage holders in Tainan rose above 40 percent in the third quarter for the first time in history to 40.16 percent, up 1.90 percentage points from the previous quarter, but it went down 0.68 percentage points to 37.49 percent in Kaohsiung.
The major city with the lowest mortgage payment to income ratio in the third quarter was Taoyuan, which saw the ratio rise 1.03 percentage points from a quarter earlier to 33.04 percent, according to MOI figures.
Source: Focus Taiwan News Channel