Data suggests real estate in recovery
Apartment transactions nationwide reach 40,000 for first time since April
The number of apartment transactions in Seoul and its surrounding areas rose sharply in October, adding to the belief that the real estate market is on the path to recovery.
According to the Ministry of Land, Transport and Maritime Affairs, the number of apartments that were traded last month in Seoul and the surrounding area rose nearly 40 percent.
In October, 3,126 apartments were bought and sold in Seoul, which is 39 percent more than in September, while apartments traded in the surrounding areas rose 37.5 percent to 12,401.
Apartment transactions in Gangnam, southern Seoul, rose 31.1 percent to 801. Gangnam is one of the priciest neighborhoods in the country. Sky rocketing apartment prices there drove up prices across Korea in the middle of 2007, causing the government to step in.
Apartment transactions in the 14 districts north of the Han River, rose 38.8 percent to 1,291.
In total, 22.7 percent more apartments were bought and sold across the country last month, reaching 41,342.
“The more active apartment transactions [were caused by] the government measure to ease the debt-to-income [DTI] loan restriction regulation,” said a spokesperson at the Ministry of Land, Transport and Maritime Affairs. “This is the first time since April when apartment transactions across the country have exceeded 40,000.”
The official said the data is a sign that the real estate market has reached its lowest point and has entered a recovery phase.
The previous Roh Moo-hyun administration introduced the DTI regulations and other real estate measures in 2007 in an effort to contain heated apartment prices.
But as the economy fell during the global economic crisis in 2008, the real estate market fell with it. Apartment transactions virtually screeched to a halt.
Even with the sputtering real estate market, the government maintained the DTI ratio in 2008 and 2009, particularly in Seoul and its surrounding areas.
But on Aug. 29, the government changed its stance. Seoul lifted the ceiling on the amount of money people could borrow to buy a home, and moved to delay hikes in registration and acquisition taxes for those who purchase new residences in an effort to revive the housing market, which had been starting to affect the overall economy.
The Land Ministry said October transactions reflect the recovery since the easing of the regulations. Those who either buy or sell apartments have to report the transaction to the government within 60 days.
However, some experts cautioned against too much optimism.
When compared to the 50,803 apartments that were bought or sold per month on average between 2006 and 2009, the number of apartments traded last month fell short by 18.6 percent. Particularly in the case of Seoul, monthly apartment transactions were 59.3 percent lower, while surrounding metropolitan areas were 50 percent less.
The ministry said it would take some time before the housing market recovers to the level seen before the 2008 financial crisis.
“During winter vacation, apartment transactions typically rise,” said Park Deuk-bae, an analyst at Hyundai Research Institute. “However, it is hard to say that the market is completely in recovery mode, particularly since demand for housing is severely withdrawn because of rising household debt.”
By Lee Ho-jeong, Hwang Jeong-il [firstname.lastname@example.org]