By Kim Tong-hyung
While policymakers scramble to revive a motionless housing market, frustrated first-time buyers remain determined to get on the first rung of the property ladder, market figures show.
Home prices in Seoul fell for the 17th consecutive week, according to recent data from real estate industry analysis firm, Speed Bank, as transactions continue to evaporate quickly in the housing market amid economic uncertainty.
Similar figures were announced by Dr. Apartment, another market researcher, which observed that the dramatic slide in house prices in affluent southern Seoul neighborhoods is having a drag-down effect on the whole market.
The numbers combine to make a poor early report card for the latest package of government measures announced earlier this month aimed at stemming the skid in house prices and helping homebuyers and tenants.
The so-called ``May 10 measures’’ represent the 17th time the Lee Myung-bak government has tweaked tax rules and housing policies to breathe life into the real estate and construction market. It has scored zero out of 16 so far and experts aren’t convinced about the latest swing either.
``The market is showing virtually no response to the May 10 measures. While the government continues to announce new policies, it can’t ease lending restrictions based on debt-to-income and other criteria due to the erosion in household finances, so there are limits,’’ said a Dr. Apartment official.
``The Seoul metropolitan area continues to be sluggish, especially the southern Seoul (Gangnam) districts.’’
The May 10 steps can be summarized as the easing of anti-speculation measures imposed on the affluent southern Seoul neighborhoods that keyed the mid-2000s housing boom and a lifting of price caps on unsold new homes. However, policymakers resisted calls by the construction industry to ease lending restrictions based on debt-to-income ratios, which limit the borrowing of homebuyers in proportion to their annual income.
House prices in Seoul dropped by an average of 0.04 percent last week, extending a streak of decline that began late January, according to Speed Bank. Prices in Gyeonggi Province cities fell by around 0.03 percent, while the value of Incheon homes declined by 0.01 percent.
The drop in house prices was most dramatic in southern Seoul areas. House prices dropped by 0.18 percent in the Songpa district last week, 0.13 percent in Gangnam, and 0.11 percent in Seocho.
Since the recent financial crisis, Korean homeowners have endured a dramatic drop in prices after a boom that drove up values and fueled a nationwide borrowing binge that now has the consumer debt mountain equal to an entire year’s gross domestic product (GDP).
Government officials, seemingly unfazed by their lengthy streak of ineptitude, continue to claim that the housing market will warm up in 2012 or what's left of it. Critics, who include a growing school of economists, say the market will be lucky to avoid going into a deep freeze.
To an increasing number of observers, it’s becoming obvious that Korean house prices will never reach the heights hit during the market’s mid-2000s boom. Housing bubbles in Japan, the United States and Britain began to pop when household debt in these countries reached 95 percent of their GDP but Korea has long passed that point.