Real estate transactions come alive

After being mired in a slump since the global financial crisis in late 2008, the real estate market has finally come to life, with housing transactions surging nearly 43 percent year-on-year nationwide in September, more than 80 percent in areas surrounding Seoul and 97 percent in the capital.

According to the Ministry of Land, Infrastructure and Transport yesterday, more than 56,000 housing units were traded last month, compared with 39,000 the same month a year earlier. The September figure also represents a 21.8 percent increase from August.

In late August, the government announced measures to stimulate the market.

By region, housing units traded in the greater Seoul area increased 81.1 percent year-on-year while those in the other parts of the country gained 20 percent.

Gyeonggi, which surrounds the nation’s capital, saw transactions soar 81.2 percent.

Seoul alone saw a 97 percent year-on-year expansion while the Gangnam, Seocho and Songpa districts that were at the center of the nation’s overheated real estate market in the mid-2000s grew 65.1 percent. Overall housing transactions in Gangnam doubled from a year ago, and transactions in Gangbuk District, northern Seoul, grew 89 percent.

“Housing-unit transactions in July and August contracted as the temporary acquisition tax cuts expired at the end of June,” said a Land Ministry official. “However, after the government’s Aug. 28 measures were announced, demand started to grow again.”

The government on Aug. 28 laid out measures to revive the market while addressing the jeonse crisis.

The goal was to encourage those waiting to rent on jeonse - a lump-sum deposit in lieu of monthly rent - to home buyers. One stimulus measure was to offer loans from government financial institutions at interest rates of between 1 percent and 2 percent. It was intended to fund 40 percent to 70 percent of home loans by tapping the 16 trillion won ($14.9 billion) government housing fund. Each home buyer was to get about 100 million won, which the government estimates will eventually total 300 billion to 400 billion won.

The frozen real estate market has been one of the biggest headaches for the Park Geun-hye administration. The market tumbled quickly since the global crisis in late 2008 and showed no sign of sustainable recovery under several stimulus measures going back to the Lee Myung-bak administration.

Many home owners became “house poor.” They purchased apartments prior to the crisis with huge loans, then saw home values plummet. Some were forced to sell or put their property up for auction.

The frozen market also created another problem: Minimum two-year jeonse prices started to surge as many potential buyers waited for apartment prices to bottom out.

BY LEE HO-JEONG [ojlee82@joongang.co.kr]