By Yoon Ja-young
Staff Reporter
Though housing prices in Seoul have fallen from their peak, they are still too expensive for ordinary people. Transactions have plunged on the market as potential buyers expect prices to fall further, while homeowners estimate them to rebound following the government's deregulation.
``Transactions have decreased as the price gap is too wide between buyers and owners,'' said Lee Jung-hwa, a real estate broker in Shindang-dong, downtown Seoul. She said the two parties aren't reaching a consensus. According to Real Estate Bank, a housing market information company, apartment prices in Seoul fell 0.01 of a percentage point last week, which means they are standing still without many transactions being made.
For one thing, potential homebuyers don't see the current prices as cheap. They don't think they have really fallen, and expect them to start plunging as the economy turns from bad to worse. Real Estate Serve, a real estate market information provider, recently reported that an average urban worker needs to save his income for 11 years and six months, without spending a single penny, to buy a 109 square meter apartment in Seoul, which averages 528.1 million won.
While the apartment price fell 0.29 percent from September, the average monthly income of urban workers plunged 4.05 percent, to 3.8 million won from 4 million won the previous quarter. ``When considering that the average urban worker's income is similar to the upper 35 percentile of the whole population, it should be even more difficult for most people,'' a spokesperson at Real Estate Serve said.
Homeowners, meanwhile, believe the market has already passed the worst, and expect it to rebound soon on abundant liquidity.
This has resulted in the wide gap between the prices that buyers want and those that homeowners expect.
The potential buyers and the homeowners are also interpreting deregulation differently.
The finance ministry announced recently that it would scrap heavier capital gains tax levied on those who own more than one home. Potential home buyers expect the measure to pull down housing prices, as multiple homeowners, who couldn't sell their houses due to the tax burden, would start putting them for sale. However, homeowners take deregulation as a housing market boosting measure, and they expect that demand for apartments to increase as there will be no tax hurdle.