Realty Market Sees Spurt As Banks Cut Deposit Rates

Money is marching into the property market as interest rates stay low. The unattractive deposit interest rates, which have fallen to the 6-percent level, are inducing investors to turn to properties. Sales of real estate, and prices, are up. Sales of apartment units, which had been slack lately, are becoming popular again.

"When interest rates fall, people turn to property markets, a stable investment," said a researcher at the Korea Housing Institute, a private organization that studies the real estate industry. "If corporate restructuring is successful, the property market can be fully revitalized."

Property sales were exceptionally low last year. Real estate agents complain that sales were worse in 2000 than during the 1997 financial crisis. Except for a few rich districts, real estate prices in most areas of Seoul fell steadily until the end of last year.

Helped by the recent rebound of the financial markets, however, the market for small and midsize apartments and small commercial spaces has gained some momentum so far this year.

People are also buying homes on the assumption that prices have already hit bottom. Apartment units in the upscale districts of Gangnam and Seocho are selling for up to 20 million won ($16,000) more than they went for last year.

The units of newly constructed apartment buildings in those and other good locations are also selling well this year, after showing sluggish sales last year due to weak consumer confidence. Daelim Apartments in Imun-dong, Seoul, said it sold 71 units in January, and that its unsold apartment count decreased to under 200 of its total of 703 units. Other apartments also said that their unsold units numbers are dwindling.

by Seong Jong-soo