Services collapse except in Seoul property and finance

Services contracted in the third quarter, with some bright spots in certain businesses and in some areas.

Real estate and finance companies did well as people borrowed money and bought properties as government cooling measures resulted in a scramble for properties.

In Korea minus Seoul, the service sector contracted on year in the third quarter, according to Statistics Korea. In Seoul, services grew 2.2 percent. In Incheon, they fell 11.6 percent, Jeju 8.7 percent and Gangwon 5.6 percent.

Jeju and Gangwon are heavily dependent on tourism. Incheon was affected by a decline in airport traffic and the collapse of duty-free sales. In the case of Incheon, transportation and warehouse activity declined 40 percent. Restaurant and accommodation business fell by 20 percent. Sports, arts and leisure business declined 34 percent.

In Jeju, sports, arts and leisure business fell 42.3 percent, while the restaurant and accommodation business declined 13.8 percent. Transportation and warehouse business fell 22 percent, while wholesale and retail fell 14.8 percent.

In Gangwon, sports, arts and leisure business activity plummeted 46 percent, restaurant and accommodation business declined 19.5 percent and transportation and warehouse activity fell 12.6 percent.

In Seoul, sports, arts and leisure business activity in the third quarter fell 47.5 percent year-on-year, restaurant and accommodation business fell 14 percent, and transportation and warehouse businesses contracted 34 percent.

In real estate, activity was up 16.2 percent, while in finance, it grew 27.6 percent.

Despite the government’s strong measures against the real estate market, people are buying out of fear that prices will rise because of the measures. Experts say that the measures will result in a limit in supply growth.

Tenant protection legislation, which guarantees renewals and limits price increases, have helped fuel panic buying.

“In the third quarter, there was a sharp increase in real estate transactions,” said Yang Dong-hee, Statistics Korea’s service industry trend director. “Additionally with people borrowing money to buy up stocks, the financial and insurance industry saw a favorable growth.”

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