Few customers visit realtors’ offices nowadays despite tax cuts amid economic uncertainty at home and abroad. This is a deserted row of realty shops in Seoul. / Korea Times
By Jane Han
What goes up indeed comes down, and the continuously tumbling prices in the ``Bubble Seven'' districts further proves that even the nation's hotbed of property speculation is not an exception to the rule.
So far this year, prices in these towns ― Mokdong, Gangnam, Sonpa, Seocho, Bundang, Yongin and Pyongchon ― are down an average of 3 percent, according to Property Bank, a Seoul-based real estate consulting agency.
This means, an average apartment price in these districts that once cost 818 million won is now valued at 793 million won. In extreme cases, however, properties that were priced above 1 billion won have seen their value drop by up to 20 percent.
Even after the government's back-to-back measures to revive the slumping real estate market, the apartment-dense areas south of the Han River mainly led the fall. In fact, apartments in Seoul saw the steepest plunge of the year last week, with average values seeing a week-on-week drop of 0.08 percent, according to Property 114, another real estate brokerage.
``There are some parts of the country that are weathering the property bust, but it's safe to say that most regions are suffering from the rapid downturn,'' said Kim Kyoo-jung, a researcher at Property 114.
Market estimates show that areas outside of the speculative zones saw a steady decline of 0.5 percent this year.
The biggest contributor leading the tumble is the lack of transactions, which have consistently dropped since April. Almost 14,000 transactions were made in April, but the amount nearly halved to 8,000 in August, according to government data.
``Buyers and sellers were both hesitant to take action because they were waiting for the government to ease tax rules,'' said Kim. ``But even after some were lifted, the situation isn't changing because cash-squeezed people don't want to make heavy investments.''
Some who made purchases early on are now being cornered into canceling contracts or making urgent sell-offs because they can't handle the heavy payments.
The Lee Myung-bak administration said late last month that it would increase the threshold for the comprehensive real estate tax from 600 million won to 900 million won from next year and give tax discounts to senior citizens.
Experts forecast that the deflation will last at least until the first half of next year driven by high interest rates and serious money shortages in households