House prices to stay anchoredHouse prices in Korea are unlikely to rebound this year due to a lack of positive factors and tough economic conditions, analysts said yesterday, adding to concerns over the lethargic property market in Asia’s fourth-largest economy.
The grim forecast comes despite speculation that Korea could introduce tax cuts for home buyers again this year in a bid to stimulate the sluggish property market. Lawmakers failed to extend the temporary tax benefits at the end of last year.
The analysts said there is no clear momentum to turn around the dismal market, though the incoming government could take a series of steps to revitalize the market as the prolonged slump could pose a serious threat to the overall economy.
“The real estate market is unlikely to recover quickly unless drastic measures are taken,” said Yang Hae-geun, an analyst at Samsung Securities.
Housing transactions in the capital and adjacent regions have almost come to a halt since the end of last year when the tax cuts were terminated, according to Real Estate 114, a real estate information provider affiliated with Korea’s Mirae Asset Financial Group.
Byun Sung-jin, an analyst at Mirae Asset Securities, said he expected house prices in Seoul to drop 10 percent this year, saying the incoming government’s possible new measures would not necessarily boost the market.
Prices of apartments in Seoul dipped 4.5 percent last year, the biggest decline since 1998 when Korea was hit hard by the Asian financial crisis, according to data compiled by Korea’s top lender Kookmin Bank.
Most of the 11 analysts surveyed by Yonhap News Agency painted a gloomy picture of the country’s housing market. Only three said they believe it will rebound.
“I don’t think there will be any big changes, although there are expectations the real estate market will normalize with the inauguration of the new government,” said Park Won-gap, the senior head of real estate business at Kookmin Bank.
President-elect Park Geun-hye is set to take office on Feb. 25.
The bleak outlook came days after Bank of America Merrill Lynch issued a report that house prices in Seoul could rebound this year as Korea may ease regulations on the property market amid declines in the supply of new homes and unsold apartments.
Home prices in provincial areas could drop due to an increase in the supply of new homes. Yonhap