Seoul apartment prices near peak, finance minister says

Apartment prices in Seoul have risen to the levels where they were before the global financial crisis of 2008, which prompted a severe market correction, Finance Minister Hong Nam-ki said Thursday.

“I have a serious concern about one-sided anticipation that the housing market will become unstable again in the second half of this year because of new regulations that will come into effect from June,” the minister said during a policy meeting.

Along with the government’s housing supply expansion plan, homebuyers should be aware of both internal and external factors before making their bets.

Inflation-adjusted prices of apartments in Seoul are nearly on a par with those seen before prices crashed in the midst of the 2008 global financial crisis, the minister said.

According to data from KB Kookmin Bank’s real estate information platform Live Real Estate, the average sale price of a small to medium-sized apartment in Seoul stood at 995.8 million won ($895,020) as of May, up 43.3 percent from 308 million won two years earlier.

The possibility of early tapering by the US Federal Reserve, which could trigger a rush of capital outflows and a hike in interest rates here, is something that investors need to factor in, Hong said.

Currently the government is making changes to its newly introduced policies, relaxing taxation and borrowing rules for first-home buyers, vulnerable people, and people who purchase properties with the intention of residing there.

“But the direction of housing policy has not been changed, which centers on increasing housing supply, anti-speculation measures against multiple-home owners and short-term traders, and providing support tailored to individual needs,” he said.

In July the government will begin accepting applications for 30,000 housing units as a part of its plan to increase the number of new homes by up to 836,000 nationwide over the next four years.

By Park Han-na (hnpark@heraldcorp.com)