Property market shows signs of mild recovery

By Yi Whan-woo

The sluggish real estate market has shown signs of a mild recovery on the back of the government’s stimulus package introduced on April 1, latest data showed Friday.

According to the Ministry of Land, Infrastructure and Transport, the trading volume of houses rose for the first time in April from a year earlier, with the number of transactions reaching 69,529, up 8.6 percent from March.

The trading volume decreased 1.4 percent in March, 14.2 percent in February and 5.7 percent in January.

The government believes that the set of stimulus measures has started having an effect on the real estate market.

“Our set of measure to revive the market is taking effect,” a ministry official said.

The package centers on tax breaks for homeowners and control of the supply of new homes to keep prices from falling.

The government exempted first-time homebuyers with a combined annual income of less than 60 million won ($53,800) from acquisition tax when they purchase a house worth less than 600 million won and less than 85 square meters. This tax break is available until the end of the year. The owners of multiple homes were also exempted from paying the tax.

By region, the number of house transactions in the capital area stood at 29,092 in April, up 19.3 percent from a year before. Some 8,559 homes were sold and bought in the nation’s capital, and 1,596 of them were concentrated in the affluent districts of Gangnam, Seocho, and Songpa. The three districts posted a combined year-on-year increase rate of 70.5 percent.

The comparable figure for the rest of country was 2 percent at 40,037.

“The government’s measure definitely had a positive impact on consumers who are now relieved from anxiety in spending their money on real estate,” said Park Won-kab, a real estate team head at KB Kookmin Bank.

However, he cited the fact that the number of homes sold still only hovered at around 70,000.

“The number of unsold homes will increase in the second half as new houses being built by construction firms will be completed by then,” he said.

Another expert echoed a similar view, pointing out the purchase of homes was heavily concentrated in southern Seoul.

“The Gangnam area with a number of old apartment is where a land development project will take place under the city government,” said Lim Byung-chul, a research manager at Real Estate 114, a real estate information provider affiliated with the Mirae Asset Financial Group.