Realtors’ phones ringing in the new year

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Realtors’ phones ringing in the new year

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The long dormant Korean real estate market is showing signs of recovery, owing to a handful of government stimulus measures.

Real estate agents are receiving an increasing number of calls from tenants willing to purchase houses, and their inquiries are leading to transactions.

A realtor surnamed Kim in Daechi-dong, southern Seoul, was swamped by phone calls Monday, although no one dropped by his agency due to the cold weather.

“There were more than 10 missed calls when I came to the office at 10 in the morning,” Kim said. “At this time of year, usually, there are inquiries about jeonse, but this year is different. People are asking about purchases. To afford rising jeonse, they need large loans anyway.”

As a result, prices for apartments are actually going up.

According to the Korea Appraisal Board, apartment prices in the Seoul metropolitan area went up 0.08 percent last week, while prices in Jeonju increased 0.06 percent.

Figures also show that more apartment transactions are taking place.

Data from the Seoul Real Estate Information Center, which is run by the Seoul city government, shows there were 1,460 apartment transactions in Seoul from Jan. 1 to 13, compared to 1,134 in all of January last year.

“Jeonse houses have skyrocketed along with surging demand, causing consumers to change their mind and buy one,” said Seo Jae-pil, president of Eulji Real Estate in Junggye-dong, northern Seoul.

Jeonse prices of apartments in Seoul and nearby areas rose 0.22 percent last week from a week earlier, increasing for the 72nd consecutive week, board data showed.

An 84-square-meter (904-square-foot) unit at Raemian Firstage in Banpo-dong, southern Seoul, climbed 30 million won ($28,286) in the past month, hovering at around 1 billion won in jeonse.

A same-size unit of Taeyoung Desian in Pangyo, Gyeonggi, jumped 40 million won to 450 million won in jeonse during the same period.

The average percentage of jeonse to sale price hit 68.7 percent nationwide at the end of December, the highest since October 2002. In the Seoul metropolitan area, the percentage surged to 64.8 percent.

“As some jeonse demand has turned to purchases, sellers are putting their houses on sale with higher prices,” said Kim Nam-il, a realtor in Pangyo.

The current signs of recovery can also be attributed to a handful of government stimulus such as the 50 percent reduction in the acquisition tax passed by lawmakers at the end of last year.

Mortgages offered by the government have been streamlined and rates are low compared to previous years.

“Expansion of the tax and financial incentives has improved conditions for people to buy their own homes, making them financially capable of making purchases,” said Lee Nam-soo, a director at the private banking center in Seocho of Shinhan Bank.

In addition, some people believe that prices will only increase.

According to a survey by an online property market researcher, Dr. APT, 68.6 percent of 334 respondents over 20 years old said housing prices either have already bottomed out or will do so this year.

“Uncertainties about government policies on housing significantly decreased with the passage of major bills by the National Assembly at the end of last year,” said Park Won-gab, an analyst at KB Kookmin Bank.

Other analysts forecast the favorable atmosphere would continue for the time being, since jeonse prices are still predicted to climb this year and expectations for additional incentives from the government are high.

A Korea Housing Institute report recently forecast that jeonse prices would go up 2 percent nationwide this year. And the Korea Appraisal Board also projected a 3 percent growth in jeonse prices.

“The growth trend may slow as new apartments enter the market, but demand is still high,” said Kim Ri-young, a research fellow at the board.

On the other hand, some people caution that the national economy is overburdened with 1,000 trillion won of household debt.

“It is too early to say housing prices are going up again because the current recovery signs can be temporary due to the government measures,” said Shim Kyo-eon, professor of real estate studies at Konkuk University.

“Surging household debt and uncertain economic conditions can be hurdles to normalization of the housing market.”


BY HWANG JEOG-IL, SONG SU-HYUN [ssh@joongang.co.kr]

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