Housing gets a boost in January, reports show

Korea’s housing market is getting a breath of fresh air, as more Koreans choose to purchase homes despite skyrocketing lease prices.

Two reports released by the government and a state-run research think tank on Wednesday showed that the frozen property market has slowly shown signs of a revival since last year, largely thanks to government policies that boosted transactions.

According to a report by the Ministry of Land, Infrastructure and Transport, national housing transactions jumped 34.1 percent in January from a year earlier - the best performance for the month since 2006.

Housing sales stood at 79,320 units in January, the report showed.

In Seoul and the surrounding area, transactions spiked 32.5 percent to 34,301 year-on-year. The figure in the other provincial areas also surged, 35.3 percent to 45,019.

The remarkable increase in sales can largely be attributed to a series of measures announced by the government last year to help revitalize the moribund real estate market, the report said. The government slashed the minimum age for housing units eligible for reconstruction from 40 to 30 years to allow builders the ability to renovate old apartment buildings sooner.

This was considered significant for reviving the market, particularly considering common practices here, in which many investors buy old apartments close to renovation before prices increase.

The other report, released Wednesday by the state-run Korea Development Institute (KDI), stated that the country’s housing market improved in the fourth quarter of 2014, with home prices and transactions going up.

The prices of homes in the country rose 1.3 percent in the period between October and December compared to the same period in 2013, and 1.2 percent from the previous quarter.

The think tank added that the government’s decision to ease the loan-to-value ratio and debt-to-income ratio contributed to those figures, making it easier for buyers to take out loans.

Its report also showed that transactions stood at 291,555 during that three-month period, up 8.6 percent from a year earlier. That’s 30 percent higher than the quarterly average of 224,557 since 2006.

“The market is showing signs of improvement, largely due to the government’s measures announced in September [intended] to bolster the real estate market,” the report said.

Additionally, average jeonse prices rose 3 percent from the year before. The cost of the long-term deposit on leased homes reached 70 percent of the actual cost of houses in the fourth quarter, the KDI report said.

BY Song Su-hyun [ssh@joongang.co.kr]