Journal!!!

Last Saturday, I went to 秘密基地 for Taipei city night view with my best friend. We had talked for a long time. Surprisingly, we both mentioned about the development of Taipei City in recent years and a ridiculous increase house prices. We worried that would ultimately cause financial market crash if house price started to fall. Compared to 5 years ago, current average house prices are almost quintuple higher. if a house is sold at $1,000,000 in five years ago, it can be sold approximately at $5,000,000 now. The reason is that our banks are only required 10% downpayment, a 90% LTV with an offered interest rate lower than 2%. For example, if we bought a $10,000,000 property, we have to pay $1,000,000 first and interest payment of $33,265.75 per month in 5 years.  After 5 years, it is sold at $50,000,000. By paying off residuals, we made up approximately at $40,000,000 profits. Well, consider interest payment, greater present value and inflation factors, investors have to pay in the total amount of principle, interest, and inflation approximately at $2,333,557.65. The total approximately profit is $37,666,442.35 and 3766.62%!!!!!!!!!!! That is why house market kept growing up persistently in recent years because almost everyone speculate house market. They know the they can't make this greater amount of profit just by work. For example, optimistically, high-tech engineers can earn $2,000,000 per year and beat market industry with an interest rate of 8% annually and effective rate of 8.3%, he has to spent 11.8 years without any living expenses to make $37,666,442.35.

So, I believe in a crashing house market soon or later if the situation isn't regulated or controlled by our Government.