By Kim Hyun-cheol
Staff Reporter
No further volatility is forecast in the local real estate market under the current demand and supply situation. But there is still room for a bubble in certain lucrative areas, including Seoul's Gangnam area, a private research institute warned Sunday
Led by small-sized apartments in Gangnam, flat prices in several areas are on a quick rise, the Hyundai Research Institute (HRI) said in a report.
Such partial recovery in the housing market is attributable to a rebound in demand as the fear for a financial crisis stabilized, according to the report. Public expectations for new policies in favor of house owners, as well as cuts in interest rates, contributed to the hopeful signs of revival.
The tendency, however, is hard to last under the overall economic conditions as negativities still prevail in the market to restrict further growth in housing deals, HRI said.
In supply, both unsold apartments and potential offerings of older flats abound. As of the end of February, some 50,000 apartments are on sale.
However, HRI anticipated outbreaks of regional bubbles, especially around Seoul and its vicinity.
"Compared to provincial regions, the Seoul area is much more susceptible to real estate-related deregulations with constant demand in line," the report said.
"Short-term floating funds in the market, estimated to be as much as 800 trillion won ($642.1 billion), could worsen the bubble in some popular regions."
To shore up transactions, the report suggested discount sales be activated for unsold apartments. It also urged them to be repurposed as start-up offices and among other possibilities.
"It's a major government duty to keep the real estate market balanced between slump and bubble. Policymakers should keep in mind how to properly soak up part of excessive profits from reconstructions or redevelopments in the metropolitan area," it said.