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Are Housing Prices Likely to Drop?

Posted July. 16, 2005 03:05,   


Are Housing Prices Likely to Go Down in the End?-

Starting this month, housing prices have apparently been on the downward path, as nominal prices of apartment complexes are dropping and the number of apartments for sale is increasing in the Seoul Metropolitan area. Reconstruction apartment complexes in the Gangnam area exemplify these trends.

With the government’s comprehensive real estate policies slated to be announced next month, which target the levying of more taxes on multiple homeowners, investment sentiments are significantly shriveling.

However, since both those who plan to sell and those who plan to purchase their houses decided to put their plans into practice after the government’s policies announcement while playing a wait-and-see game, actual transactions are not taking place.

Nominal Prices on the Decrease and Apartments for Sale on the Increase-

The “Jugong one” complex (45 pyeong) in Jamsil-dong, Songpa-gu, has kept its nominal price of about 1.3 billion won thanks to its high popularity to the extent that it has been difficult to find it on sale as of early June. However, these days, even though eight apartments for more than 1.2 billion won were laid out for sale, nobody wants to purchase them.

The same is true of the “Jugong five” complex (36 pyeong) in Jamsil-dong. Nominal prices of the apartment have ranged from 1.14 billion won to 1.17 billion won, down 30 million won for the past week, but no actual transactions have been settled at all.

As for the “Jugong one” complex (13 pyeong) in Gaepo-dong, Gangnam-gu, Seoul, the apartments were put up for sale, with nominal prices of 550 million won, and were down 20 to 30 million won for the last seven days, but nobody wants to buy them.

Due to these trends in the market, prices of some middle and large-sized apartments in Daechi-dong, Dogok-dong, and Gaepo-dong areas in Gangman-gu, where many high-priced apartments are located, are seeing a downward trend.

As for old “Hyundai first” apartments (43 pyeong) in Apgujeong-dong, Gangnam-gu, even if they were sold and purchased for 1.2 to 1.25 billion won previously, these days, their prices have fallen to 1.15 billion won.

Within Tower Palace in Dogok-dong, Gangnam-gu, also known as a representative of high-priced apartments, some apartments were also urgently laid out for sale. The first Tower Palace, which has an eastern aspect and 69 pyeong, was put up for sale, with its nominal price at 2.4 billion won, down about 200 million won from two months ago. In addition, the 69-pyeong westward-facing apartment was put up for sale with an asking price of two billion won.

Housing prices in Bundang New Town in Seongnam City and Yong-in City, which have skyrocketed due to expectations for the Pangyo New Town development in Seongnam City, Gyeonggi Province, are also showing signs of a decrease.

As for Doosan apartments (31 pyeong) in Imae-dong, Bundang New Town, their asking prices dropped from 530 million won to 500 million won early this month, and asking prices of Samsung apartments with 49 pyeong in Seohyeon-dong, fell from one billion won to 950 million won.

Housing Prices are Likely to Remain Fairly Steady for the Time Being-

Despite the current situation, experts expect that actual transaction prices will not decrease sharply because transactions themselves are not taking place.

A weekly-based market value survey of real estate information providers, including Doctor Apartment, Real Estate 114, Speedbank, Uniasset and Ten, also showed that even if the degree of an increase fell this week, compared to last week’s rate of 0.40 to 0.48 percent, housing prices in Seoul increased by 0.30 to 0.35 percent on average.

Kim Hye-hyeon, general manager of Real Estate 114, noted, “Since both those who plan to sell and those who plan to buy their houses decided to put their plans into practice after the government’s policies announcement, despite the fact that some houses were urgently laid out for sale, actual transactions are not taking place,” adding, “Housing prices appear to be remained fairly unchanged for the time being.”

Jae-Seong Hwang jsonhng@donga.com