This paper uses house prices in four Taiwanese cities to test whether there are bubbles in the Taiwan housing market. Panel data tests are employed to determine whether the movement of house prices diverges from that of household income and rent. Following the framework of Mikhed and Zemčík (2009), this paper constructs the bubble indicator for the Taiwan housing market. The relationship of the market with mortgage rate, money supply, inflation rate, economic growth rate, homeownership rate, and user cost for housing is also discussed. The empirical finding shows that the policy on money supply in Taiwan is most likely related to bubbles in the sample period. Although the annual increase in homeownership rate in Taiwan is encouraging, this does not mean the public is not burdened by a housing bubble. The evidence presented in this paper may provide implications for policy reforms by the government.