TAIPEI (TVBS News) — The endeavor to minimize material desires in pursuit of homeownership has become a norm among many young people in Taiwan. Despite the country's strong purchasing power, a stark disparity between income and housing affordability persists.
Nikkei conducted an interesting survey comparing residents' income across various countries using Starbucks latte as a benchmark. While South Korea and Japan led the pack with 27 and 21 cups, respectively, Taiwan followed closely behind, with individuals from the service and industrial sectors able to afford around 14 cups per day. Taiwan's purchasing power ranks among the top in Asia, trailing only behind South Korea and Japan.
However, this purchasing power starkly contrasts the staggering ratio of house prices to income. The latest data from the Ministry of Interior reveals that the national ratio reached a historic high of 9.82 in the second quarter of 2023. In Taipei, this ratio soared to 15.5, implying that it would take 15 years of saving an entire salary without expenses just to purchase a house.
Comparatively, the World Bank Center cites a median ratio of house price to income at 3.9, with developed countries at 5.5. Taiwan's average ratio of 9.82 signals a serious problem.
The root cause of this dilemma lies in stagnant wage growth over the long term. While Taiwan's wage growth was expected to be robust, it lags significantly behind developed countries like those in Europe and the US. Consequently, low wages and high property prices continue to burden Taiwan's youth, exacerbating the issue of low birth rates.
“The main reason is due to stagnant wage growth over the long term," real estate analyst Ho Shih-chang explained. Taiwan’s wage growth lags significantly behind developed countries like those in Europe and the U.S.
Low wages and high property prices continue to burden Taiwan's youth, exacerbating the issue of low birth rates. Hope and motivation must be instilled in the population to address these challenges. Government intervention is imperative to rectify the situation, ensuring that Taiwan's youth can aspire towards homeownership and a brighter future.