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Last Updated: Sep 04, 2013




A 15.43% rise Taiwan’s Lutheran home price index during the year to end-Q2 2013, (14.52% inflation-adjusted) follows four years of unbroken house price increases, according to Sinyi Real Estate Planning and Research.  The latest quarter was spectacular too:   the home price index rose a record 7.45% (7.33% inflation-adjusted) in Q2 2013.

During the year to Q2 2013:
  • In Taipei, the capital, house prices rose by 11.51% (10.63% inflation-adjusted)
  • In the New North, house prices increased 14.92% (14.01% inflation-adjusted)
  • In Taoyuan, house prices soared 20.81% (19.86% inflation-adjusted)
  • In Hsinchu, residential property prices rose by 12.59% (11.7% inflation-adjusted)
  • In Taichung, house prices jumped 18.29% (17.35% inflation-adjusted)
  • In Kaohsiung, residential property prices skyrocketed by 26.34% (25.34% inflation-adjusted)  

Local residential property prices in Taiwan vary significantly.
  • Taipei has the most expensive housing market in Taiwan, with an average home price of TWD655,000 (US$21,870) per ping (a customary and traditional unit of measurement in Taiwan which is equivalent to 3.306 square meters) in June 2013.
  • In New Taipei City, the average house price was TWD335,000 (US$11,186) per ping in June 2013.
  •  In Kaohsiung, the average house price was over TWD152,000 (US$5,075) per ping over the same period.
  • In Taoyuan, Hsinchu, and Taichung, the average price of a residential property was just above TWD180,000 (US$6,010) per ping.

Demand remains strong. In July 2013, property sales in Taipei rose by 20% to 4,043 units from the previous month while transactions in New Taipei City increased by 13.7% to 8,066 units, according to Huang Shu-wei of Yung Ching Realty. Likewise, property sales in Taichung rose by 17% to 5,198 units in July 2013 from a month earlier while in Tainan, sales increased by 12% to 2,163 units over the same period, according to Sinyi Real Estate Planning and Research.

Construction activity is also up. Housing permits, an indicator of the condition of the residential construction sector, increased by 3.7% to 34,861 houses in the first half of 2013 from the same period last year, based on figures from the Ministry of Interior.

Price rises may be slowed by a planned revision to the domestic luxury tax scheme, put in place in June 2011 to curb property speculation. Under the current scheme, second homes not occupied by the owner and sold within one year of purchase are taxed at 15% while those sold within two years of purchase are taxed at 10%.

“Current rules have flaws, for example, we are unable to tax those deep-pocket investors, who can wait for more than two years to sell properties,” said Finance Minister Chang Sheng-ford.

Changes may include a levy on buyers of properties, as sellers are already taxed. The plan is partly prompted by the widening house price to income ratio, 8.9 in the first quarter of 2013, up from 8.2 the previous year, according to the Ministry of Interior.

The Taiwanese economy is projected to grow by 2.31% this year, after real GDP growth rates of 1.3% in 2012, 4.1% in 2011 and 10.8% in 2010.

Analysis of Taiwan Residential Property Market »


RENTAL YIELDS
Last Updated: Apr 04, 2011



Taipei now vies with Monaco for having the lowest yields in the world. With buying prices per square metre averaging a steller US$7,200 to US$9,200, depending on size, and rents still affordable (where else can you rent a US$1.8 million home for just US$2,200 per month?), Taipei is not a happy place for landlords.

The owner of an apartment in Taipei will be lucky to realize 2% yields, except on the very smallest apartments. Given that the Global Property Guide’s figures are for gross rental yields, i.e., do not make any allowance for vacant periods, for legal costs, administration costs, cleaning and repairs, rental taxes, property taxes, and other taxes, it is safe to say that landlords in Taiwan earn nothing on their apartments.

We believe apartments in Taipei are overvalued - and will fall in price. But we should warn readers that we can get it wrong!

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Apr 09, 2013



Rental Income: The gross income of nonresidents is taxable at 20% with no exemptions or deductions allowed. There is also 5% VAT on rentals.

Capital Gains: Capital gains realized by nonresidents are treated as regular income, and are taxed at the personal tax rate of 20%.

Inheritance: Estate duty is levied at 10%.

Residents: Residents are taxed on their income from Taiwanese sources at progressive rates, from 5% to 40%.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: Apr 09, 2013



The total roundtrip cost of buying and selling a dwelling is around 10.26% - 13.3% of the property's value, including the real estate agent's 4% - 6% fee, which is shared by the buyer (1% -2%) and the seller (3% - 4%). To register the property requires three procedures, which can be completed in about five days.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: Jun 27, 2006



If the tenancy laws were properly followed, Taiwan could be regarded as pro-tenant.

Rent Control: There is rent-control, and tenants have security of tenure. However, most landlords catering to the low income segment do not follow the law.

However, those who cater to the expatriate and high income market have no choice but to follow the law. To avoid the legal disadvantages, most high-end apartments rent as serviced apartments.

Read Landlord and Tenant  »



ECONOMIC GROWTH
Last Updated: Sep 04, 2013


Modest economic growth

The Republic of China (ROC), popularly known as Taiwan, has a population of about 23.3 million and a GDP per capita of US$20,328 in 2012, according to the International Monetary Fund (IMF).  In the second quarter of 2013, the economy grew by 2.49% from a year earlier, from annual real GDP growth rates of 1.5% in Q1 2013 and 3.7% in Q4 2012, according to the Directorate-General of Budgeting, Accounting, and Statistics (DGBAS).

The Taiwanese economy is expected to expand by 2.31% this year, based on the latest forecast released by DGBAS.

In July 2013, the country’s overall unemployment rate stood at 4.25%. From 2001 to 2012, Taiwan’s average jobless rate was 4.6%, according to the IMF. The unemployment rate among young Taiwanese (aged 15-24) increased to 13.39% in July 2013 from 12.96% in July 2012, as many new graduates have begun to look for jobs.

In July 2013, inflation stood at 0.08%, the lowest level in almost three years. In 2012, the country’s inflation rate was 1.9%, from 1.4% in 2011 and 0.96% in 2010, according to the IMF.

The central bank held the discount rate unchanged at 1.875% for eight straight quarters in June 2013.

When President Ma Ying-Jeou of the Kuomintang Party took office in May 2008, he vowed stronger ties between Taiwan and China, and denounced independence for Taiwan, in sharp contrast to his Democratic Progressive Party predecessor, Chen Shui-bian, who is now in prison for corruption. The country has no seat at the United Nations (UN), having lost it to China in 1971. Despite its diplomatic isolation, Taiwan’s economy ranks as the 27th largest in the world (2012), according to the IMF.

In his inaugural address, Ma promised “no independence, no reunification and no war.” Since 2009, several memorandums of agreement between Taiwan and China on financial cooperation have been signed. These symbolic gestures reassured both investors and homebuyers alike.

In July 2010, Taiwan and China co-signed the Economic Co-operation Framework Agreement (ECFA) reducing tariffs and trade barriers between the two countries. Some analysts described it as the most significant agreement in sixty years of separation.

In January 14, 2012, President Ma Ying-Jeou won a second term in office.

From 2002 to 2007, Taiwan enjoyed robust economic growth, with an average annual real GDP growth of 5.2%. However the economy grew a meagre 0.73% in 2008 and contracted by 1.81% in 2009, mainly due to the global crisis. In 2010, the economy bounced back strongly, registering GDP growth of 10.7%, followed by 4% growth in 2011. However in 2012, growth slowed to just 1.3%, mainly as a result of the slowing economies of its main trading partners, China and the United States.






  • Moderate transaction costs
  • Low yields in Taiwan City
  • Pro-tenant luxury market
  • High rental income tax
RESIDENTIAL PROPERTY FACTS
Price (sq.m): $7,112 For a 120 sq. m. property, usually an apartment.
Rental Yield: 1.57% For a 120 sq. m. property, usually an apartment.
Rent/month: $1,117 For a 120 sq. m. property.
Income Tax: 20.00% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 12.33% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: 20.00% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Landlord Rating is based on a detailed study of each country’s law and practice.

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