Seoul apartment prices fall
THE cases of unsold apartment units after completion came to 15,711 nationwide in South Korea as of October, up five per cent from 765 a month earlier. Apartment prices in Seoul, which have continued to shoot up at since the latter half of 2016, are estimated to have hit an all-time high during the first half of 2018, causing a fears of a price bubble.
Though the government unveiled a series of measures to curb the “abnormal” housing prices, ordinary households and many property experts agree that these efforts came too late and had no effect.
A normalisation in Seoul’s housing market will almost certainly take a long time, as prices of some apartments in southern and central Seoul surged 500 million won ($442,500) over the past two years. Some units rose by around one billion won.
These record prices produced speculations that apartment complex residents formed cartels to artificially inflate the cost of their properties. In addition, some alleged irregularities conducted by speculative investors or multiple housing owners.
Now the government faces charges that weak Ministry of Land, Infrastructure and Transport policies, as well as the Bank of Korea’s (BOK) delay to its hike in benchmark interest rates, allowed wealthy property owners to rake in huge capital gains.
“It is true that the government failed to push for powerful measures – like levying heavy taxes in proportion to housing prices – in the critical early stage,” said one real estate agent in Gyeonggi province.
Property consultant Park Sang-eon picked hefty taxation on multiple housing owners and holders of high-priced apartments as the main factor for the decline since the third quarter of this year.
From early next year the comprehensive property tax will be increased in addition to regulations that took effect in the latter half of 2018. Interest burdens are also frustrating the sentiment as the BOK raised its benchmark by 25 basis points late last month.
According to the real estate data from Seoul City, the monthly trading volume of apartments in Seoul stood at 3,586 last month, which is the lowest in 63 months since it recorded 3,149 in August 2013.
A realtor in Seocho-gu, Seoul said an apartment with 106sqm in extent in Banpodong saw its prices nosedive about 500 million won from 3.8 billion won in September to 3.3 billion won early this month. He predicted a continuous price drop, citing the government-led policy that is to make public the “officially assessed land value”, which may be obligatory by next year.
A Korea Appraisal Board’s document showed south Seoul has taken the initiative in prices fall. Apartment prices in Gangnam, Seocho, Songpa and Gangdong-gu posted a drop of 0.14 per cent in the last week of November from the previous week.
Further, according to data from the Ministry of Land, Infrastructure and Transport, the number of unsold new apartments even after completion of construction is growing across the country, including in the satellite cities near Seoul.
Unsold apartment units after completion came to 15,711 nationwide as of October, up five per cent from 765 a month earlier. This was the highest in 45 months though competition for new apartments in Seoul is still keen.