A slump in the property market is feared to continue until the end of the year due to what is seen to be another financial crisis in the offing, experts and industry watchers said Sunday.
They cite a major drop in the prices of prime real estate in the upscale southern Seoul areas with more being put up for sale.
The price of a 56 square-meter Gaepo apartment tumbled to 960 million won last week, down from 1.02 billion won last month. The price peaked at 1.38 billion won in 2009.
The Gaepo apartment complex is up for “renovation” for all-out modernization to sustain the property market that has been faltering for the past couple of years.
According to Real Estate 114, an online property information provider, the prices of apartments up for renovation last week went down an average 0.17 percent across the country with Seoul seeing a drop of 0.23 percent.
Experts say that those who bought apartments with bank loans are the first to put their properties up for sale.
“We don’t see any immediate chance of recovery,” a property expert was quoted as saying by Yonhap News. “That explains why there are more apartments coming on the market at lower prices.”
The lower prices are obviously drawing customers. “Already 10 transactions have been made since the Chuseok holiday earlier this month,” the property agent told Yonhap, adding that it is an “unbelievable” number.
It is agreed among industry watchers that the nascent recovery in the property market is losing its power fast with the market in a sordid mood until the end of the year at least.
“The property prices often move in sync with developments in the financial sector,” said one bank official who is in charge of property financing. “It is because many have bought apartments with big loans from banks and their borrowings are haunting them with interest burdens at a time when the economy is tanking.”
Backing a forecast of no recovery this year is a factor for the rate of successful bidding for properties being on a decline.
The successful bid rate had more or less been above 80 percent for the last 10 years but it has dropped below 70 percent for the past two months.
Some property agents were more skeptical, saying that it is too early to speculate that the market has hit the bottom, professing their difficulty in making predictions because of the uncertainty prevailing in the market that is caused by the current financial problems in Europe and the United States.