Anger Rising As Housing Prices Soar

Skyrocketing housing prices are throwing the whole nation into disarray.

Those who laid out their house for sale are canceling contracts, and others dreaming about buying their first house are frustrated at soaring house prices.

Angry voices over the failure of government’s real estate policy prompted president Roh to convene an emergency meeting with relevant ministers on November 9 to discuss measures to cool down the red-hot housing market. This is the second of its kind after an unofficial meeting on November 1.

Soaring Prices, Raging Public-

The house price rally, triggered by a supply shortage of leased houses in mid August, is spreading to even unpopular regions where purchasing houses rarely takes place. This clearly shows that would-be homebuyers, not speculators, are driving the house price hike.

The asking price of a 31 pyeong (102.3 m2) Kumho Aullim apartment in Mangu-dong, Jungnang-gu, Seoul rose 30-40 million won to 330-350 million won in just one week. So far, the apartment price has remained still while other apartments’ prices soared.

On the website of the Ministry of Construction and Transportation, 30 to 40 writings are posted every day by angry citizens over escalating housing prices and failed government policy.

Land Offer and Loan Interest Rate Hike-

On November 8, the Korea Land Corporation (KLC) announced that the company will offer land of 7.73 million pyeong (2,500 ha) nationwide, including 5.3 million pyeong (1,749 ha) in the metropolitan area, to support the government’s housing market stabilizing policy.

This is the largest offer by the KLC to date, and more than double the average annual land offer, 3.2 million pyeong (1,056 ha), over the past five years.

Banks are planning to raise interest rates. Woori Bank raised its loan interest rate by 0.2 percent points from November 8 by scrapping prime rates. Hana Bank, Kookmin Bank, and Shinhan Bank are likely to follow suit.

President-led emergency meeting-

In the president-led meeting on November 9, participants will discuss specific measures to lower house-selling prices, deregulate construction of multi-family houses and officetels, and strengthen real estate financing management. However, it’s unclear whether those measures will prove effective due to strong public distrust of the government’s real estate policies.