High Rising Home Price Stirs Low-Demand Season

The forecast of the real estate market is foggy. The house price is hiking up in the midst of the low-demand season. In some areas, the rent is higher than the sales price. The anticipation for the rise of house price has spread over the capital area, stimulating the speculations in the real estate. The house owners are surprised and the renters are sitting on thorns. Experts anticipate that the shaky real estate market will continue until the unbalance of the market is resolved.

According the source of real estate market, the rent in Kangnam area hiked up 10 percent in July. The sale price is also gradually increasing. That is an exceptional phenomenon during the low-demand season. In the moving season in August, the rise of the real estate price is expected to be a serious social issue.

Particularly, the sale price of the houses in the re-construction area in Kangnam has unusually increased by 100 million won during past 6 months. A 13 pyong-sized apartment in Kangnam, originally priced 230 million won, now requests 340 million won for sale. 13 pyong-sized apartments in Goduk dong are also sold by 142.5 million won, 42.5 percent increased from the price 100 million won early this year. Only in Kangnam area, over 15 thousand houses have benefited over 30 percent rise this year.

Real Estate 114, an Internet real estate company, revealed that the average rise of the sales price was 4.5 percent in the first half of this year but the sale price in the re-construction area has hiked up by 22.4 percent.

The rent of a chartered house has become more difficult. The charterages have increased 20 percent due to the moving rushes of the residents of the nearby Daechi Apartment complex in Kangnam, who are seeking temporary residences during the re-construction of their apartments. Consequently, the charterages in the satellite cities are also rising.

Dong-Sung Lee, president of the Korea Housing Institute, explained that ``the hikes of the house price is caused by the unbalance between the demand and the supply, the capital influx into the real estate market due to the low interest, and the increased demand by the re-construction of the apartments. The low supply ratio of the housing accommodation (82 percent), compared to 110 percent supply ratio of the advanced countries, is the basic problem of this phenomenon.``

libra@donga.com