Are Home Prices Bottoming Out?
By Jane Han
Staff Reporter
Seoul apartment prices moved upward for the first time in seven months last week. But could the slight rebound put a stop to the downswing in the local housing market?
Various conditions are working for and against the depressed real estate market, but a few positive signs ― such as the latest rebound, a rising number of transactions and government deregulation on reconstruction ― hint that prices have bottomed out.
According to Property 114, a Seoul-based real estate consultancy with a nationwide network, apartment prices in Seoul edged up an average of 0.05 percent in the third week of January from the week before.
In Gangnam, a highly speculative zone where some of the most expensive apartments are, prices had plummeted more than 0.5 percent per week since the summer up to December. But the most recent data shows that properties there saw a 0.71 percent week-on-week jump.
Experts say the government's deregulation of the reconstruction market, low interest rates and hopes of easing anti-speculative measures in Gangnam are the driving force behind the modest rebound.
``Several factors are comforting skittish potential homebuyers,'' said Kim Eun-kyung, a consultant at Speed Bank, a local property consultancy.
She emphasized Seoul City's plan to lift regulations on building high rises along the Han River as another favorable condition. But she said the recent rebound is only a temporary rally.
``Some of the latest purchases are limited to areas where prices tanked significantly,'' said Kim. ``That's a very small chunk of the entire market.''
According to the Ministry of Land, Transport and Maritime Affairs, the number of home transactions sank to a record low in December, but sales in Gangnam, Songpa and Seocho went up by 100 compared to November.
The government's approval of Lotte Group's 555-meter skyscraper in Jamsil increased nearby apartment prices; property that was valued at 780 million won last November is now worth 1 billion won, according to realtors in the area.
Park Won-gap of Speed Bank said that although conditions have improved, a recovery of overall consumer sentiment is at the core of reviving the real estate market.
``As long as the unemployment rate is sky-high, consumer sentiment is low and inflation is high, don't expect the property market to rebound,'' he said, stressing the likelihood of home prices dipping further during the first half of this year.