Taiwanese builders say that 2007 is the year it all began – the year when the price of real estate per ping (a unit equivalent to 36 square feet) first exceeded NT$1 million, the year that spacious, high-priced residences appeared in large numbers, some selling for over NT$100 million.

Behind this triumph in pricing is the helplessness of ordinary salary-earners who have no choice but to leave the city.

Since the Taipei housing market began to sharply polarize, luxury properties that were once rare commodities have been springing up all over the city. According to the Council for Economic Planning and Development's Housing Demand Survey for the first quarter of this year, properties in Taipei priced at over NT$12 million now comprise 41 percent of all properties in the city – a record high. "With the rise in land prices and limited resources, the number of properties priced at over NT$1 million per ping will only increase, and prices are more apt to rise than to fall," observed Tamkang University associate professor of industrial education Mong-han Chuang.

Investment properties such as luxury housing are purchased by the wealthy for tax breaks – that is the reason behind the market boom.

Last year, a financial consultant saved his client nearly NT$80 million in a large funds transfer. While a direct transfer is subject to 40-percent tax, buying a luxury property at the publicly declared price of NT$20 million as a gift to the client's children meant a tax burden of only NT$800,000.

Clever financial manipulation on the part of the wealthy has generated a boom in luxury real estate sales, and the taste of rich profits has made builders greedy for more. Sky-high price tags of NT$1 million, even NT$2 million, per ping have become commonplace.

The Spillover Effect Elbows Out Salaried Workers

As luxury properties became the leading indicator of market prices, the spillover effect has caused a rise in price for both mid- and low-priced properties.

In Taipei City, second-hand properties are now priced at over NT$500,000 per ping. In central Taipei's Daan District, a three-roomed second-hand property now costs over NT$20 million, a price tag beyond the reach of even those who have been in the work force for over a decade.

Many have made the decision to sacrifice their time versus their money by way of a longer commute. Huang Chun-cheng, who has been in the retail industry in Taipei's Shilin District for over 10 years and earns about NT$70,000 per month, originally wanted to move to nearby Tianmu to live with his family. However, as there is a luxury housing complex selling nearby, the mid-ranged, second-hand property he was looking at in the area now carries an inflated asking price of NT$9.5 million, which does not include a parking space. "A parking space can easily cost NT$1-2 million. That, plus the price for the house, and there was no way to stay within our NT$10 million budget," Huang laments. He and his wife ultimately decided to move across the river to Lujhou City in Taipei County.

The investment games that wealthy people play have created a nightmare for salary-earners. "The number of middle-income people with the ability to move into Taipei City has greatly decreased," observes Benson Liao, president of the Yungching Group and Yung-Ching Real Estate.

The appearance of luxury properties is not a bad thing in itself, as it is a symbol of wealth and economic prowess. Yet using it to keep market prices up does nothing but create an illusion of wealth in the midst of poverty.

Translated from the Chinese by Ellen Wieman

Chinese Version: 豪宅遍地　薪水族被擠出市區