By Yi Whan-woo
The housing market has shown clear signs of a rebound, with its sales transactions picking up sharply in January from a year ago.
Experts forecast that the market will continue on an upward trend throughout this year, which will help slow the growth pace of prices of jeonse. This is a rental system where a tenant pays a returnable lump-sum deposit for a two-year contract instead of an irretrievable monthly rent.
According to data released by the Ministry of Land, Infrastructure and Transport, Thursday, the number of home transactions hit 58,846 last month, up 117.4 percent from January 2013.
The increase rate was highest in each January of the past five years. The rate fell by 51.3 percent in 2009 before climbing by 63.4 percent in 2010 and 24.9 percent in 2011, respectively. It then dropped by 58.8 percent in 2012 and 5.7 percent in 2013.
The January figure this year was also 36.6 percent higher than the average number of sales of homes in the 2009-2013 period.
By regions, Seoul had a 235.2 percent rise from a year ago while its adjacent regions, including Incheon and Gyeonggi Province, saw a 203.3-percent increase.
"I think the property market is showing a sign of recovery and its prices will continue on an upward trend this year," an official at the ministry's Housing Policy Division said on condition of anonymity.
An analyst at Korea Appraisal Board (KAB) under the ministry echoed a similar view, citing how housing prices have climbed for the past five consecutive months.
"Our study shows an increase in the number of home transactions coupled with a rise in housing prices which leads to a long-term reinvigoration in the market," said Park Ki-jeong, a research fellow at KAB's real estate analysis department.
Experts credit the series of government measures for the steady rebound of the housing market.
Park of KAB attributed the active sales of homes last month to various measures that took effect from January as a part of the Park Geun-hye administration's effort to boost the sluggish market.
"I'd say such increased amount of transactions came after the government's effort to ease regulations on the market from early last year, raising anticipation for the market recovery," she said.
She explained that the acquisition tax on properties worth less than 600 million won ($564,000) has been permanently lowered to 1 percent of the price, from 2 percent. The analyst also pointed out that the tax rate on homes valued at 900 million won or more was cut to 3 percent from 4 percent.
Experts are predicting that the rise in the number of home transactions will lead to a slowdown in the upward trend in jeonse prices. Under the jeonse system, a tenant pays a returnable lump-sum deposit for a two-year contract instead of monthly rent.
The government said the country's jeonse price has climbed for 17 consecutive months until January, when the increase rate went up 0.59 percent from a month earlier.
Market observers say average jeonse deposits now stand at 65 percent of the selling price of a house, up from 40 to 50 percent years ago.
"And those who can buy homes will do so instead of living on jeonse, and such a trend could slow down the growth pace of jeonse prices," said Kim Eun-jin, the research center manager at Real Estate 114, a housing market research firm.
She meanwhile emphasized that jeonse prices will continue to rise, saying a number of landlords now prefer monthly rent instead of jeonse.
"Such tendency will cause shortage in the number of homes available on jeonse and its price will inevitably go up for the time being," Kim said.
The KAB analyst held a similar view, adding the rise in jeonse prices will be extreme in and around Seoul, including Incheon, the most preferred place for newly-weds and families with teenaged students.
"Being close to Seoul is important to those groups of tenants as their workplaces and private learning classes are heavily populated in the nation's capital," she said.
The housing market has shown clear signs of a rebound, with its sales transactions picking up sharply in January from a year ago.
Experts forecast that the market will continue on an upward trend throughout this year, which will help slow the growth pace of prices of jeonse. This is a rental system where a tenant pays a returnable lump-sum deposit for a two-year contract instead of an irretrievable monthly rent.
According to data released by the Ministry of Land, Infrastructure and Transport, Thursday, the number of home transactions hit 58,846 last month, up 117.4 percent from January 2013.
The increase rate was highest in each January of the past five years. The rate fell by 51.3 percent in 2009 before climbing by 63.4 percent in 2010 and 24.9 percent in 2011, respectively. It then dropped by 58.8 percent in 2012 and 5.7 percent in 2013.
The January figure this year was also 36.6 percent higher than the average number of sales of homes in the 2009-2013 period.
By regions, Seoul had a 235.2 percent rise from a year ago while its adjacent regions, including Incheon and Gyeonggi Province, saw a 203.3-percent increase.
"I think the property market is showing a sign of recovery and its prices will continue on an upward trend this year," an official at the ministry's Housing Policy Division said on condition of anonymity.
An analyst at Korea Appraisal Board (KAB) under the ministry echoed a similar view, citing how housing prices have climbed for the past five consecutive months.
"Our study shows an increase in the number of home transactions coupled with a rise in housing prices which leads to a long-term reinvigoration in the market," said Park Ki-jeong, a research fellow at KAB's real estate analysis department.
Experts credit the series of government measures for the steady rebound of the housing market.
Park of KAB attributed the active sales of homes last month to various measures that took effect from January as a part of the Park Geun-hye administration's effort to boost the sluggish market.
"I'd say such increased amount of transactions came after the government's effort to ease regulations on the market from early last year, raising anticipation for the market recovery," she said.
She explained that the acquisition tax on properties worth less than 600 million won ($564,000) has been permanently lowered to 1 percent of the price, from 2 percent. The analyst also pointed out that the tax rate on homes valued at 900 million won or more was cut to 3 percent from 4 percent.
Experts are predicting that the rise in the number of home transactions will lead to a slowdown in the upward trend in jeonse prices. Under the jeonse system, a tenant pays a returnable lump-sum deposit for a two-year contract instead of monthly rent.
The government said the country's jeonse price has climbed for 17 consecutive months until January, when the increase rate went up 0.59 percent from a month earlier.
Market observers say average jeonse deposits now stand at 65 percent of the selling price of a house, up from 40 to 50 percent years ago.
"And those who can buy homes will do so instead of living on jeonse, and such a trend could slow down the growth pace of jeonse prices," said Kim Eun-jin, the research center manager at Real Estate 114, a housing market research firm.
She meanwhile emphasized that jeonse prices will continue to rise, saying a number of landlords now prefer monthly rent instead of jeonse.
"Such tendency will cause shortage in the number of homes available on jeonse and its price will inevitably go up for the time being," Kim said.
The KAB analyst held a similar view, adding the rise in jeonse prices will be extreme in and around Seoul, including Incheon, the most preferred place for newly-weds and families with teenaged students.
"Being close to Seoul is important to those groups of tenants as their workplaces and private learning classes are heavily populated in the nation's capital," she said.
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