Apartments go begging for buyers

The government’s measures to stimulate the local property market last month are not pushing potential buyers to open their wallets. And with a dearth of willing buyers, asking prices for apartment continue to sink.

Apartment units of 84 square meters (904 square feet) ranged around 1.4 billion won ($1.2 million) to 1.5 billion won early this year, but their owners are now asking 1.3 billion won to 1.4 billion won. At a real estate agency in Banpo, southern Seoul, located in an apartment complex with more than 2,000 units, only one customer wandered in during a recent two-hour time period ? and she wanted to rent out her property.

Analysts said the property market is still in the doldrums because the government’s recent stimulus package excluded what the public has been waiting for: a lifting or easing of the debt-to-income (DTI) ratio, which restricts how much people can borrow to buy real estate.

“It is necessary to ease the DTI so it can be easier to buy properties,” said Gwon Ju-an, director at the Korea Housing Institute’s research center.

The subsiding in prices since the government’s measures were announced in May has wiped out about 2 trillion won of aggregate value in Seoul. In the three most expensive districts in southern Seoul ? Seocho, Songpa and Gangnam ? the aggregate value of apartment complexes that are expected to be redeveloped fell by 283.4 billion won.

“Many potential buyers who have been waiting for the DTI to be eased or removed have turned their backs on the idea of a purchase,” said Choi Myung-sep, director of a real estate office Songpa Gongin in Jamsil, southern Seoul.

It is also still unclear if the government will be able to lift the transfer income tax and heaviest property taxes on multiple homeowners as promised. The new regulations should be approved by the National Assembly, but its opening has been delayed by political skirmishes.

“It’s important to lift the regulations” said economics professor Kim Kyung-hwan of Sogang University. “In that way, the effect can further contribute to stimulating the property market.”

By Hwang Jeong-il [summerlee@joongang.co.kr]