Analysts, public say surge in housing prices likely despite new policy measures
Housing prices are widely expected to soar despite the stringent regulations enforced by the South Korean government, according to market analysts Tuesday.
The government in a surprise move recently unveiled new measures to curb rising home prices, which push for tighter mortgage rules.
A report released by local brokerage Mirae Asset Daewoo warned local investors that if the new measures fail to rein in soaring housing prices, even stronger measures are likely to be adopted next year.
It recommended potential real estate investors to turn their eyes toward other related products including real estate investment trusts or overseas real estate markets.
REITs, which are designed to give regular returns and steady profits to investors, have been gaining popularity in Korea.
“The government is likely to announce more stringent measures if the market continues to be volatile,” Lee Kwang-soo, a senior analyst at Mirae Asset Daewoo said in the report.
“In terms of asset management, it would be crucial to diversify one’s portfolio by investing in REITs and other global products with stable liquidity, compared with the local property market,” he added.
Lee noted the latest measures are “the strongest and most specific real estate measures announced by the Moon Jae-in administration yet.”
In a separate survey conducted by the Seoul Metropolitan Government, over 60 percent of citizens believe housing prices will soar in 2020, while some 10 percent said it will fall.
The survey, involved 1,300 Seoul citizens over 19 years of age.
By details, 12.7 percent of the respondents said that the home prices will “skyrocket,” while 48.4 percent said that it will only increase slightly. Around 19.9 percent said the price will remain flat while 8.2 percent and 1.3 percent said that the price will “slightly fall” or “plummet,” respectively.
Regarding the hike in property taxes on multiple homeowners, 71.7 percent said they supported the measure. On the contrary, 26.2 percent said they strongly disagreed or leaned toward disagreement.
Regarding the effectiveness of the previous real estate measure announced on Sept. 13, 2018, only 27.6 percent said it was an effective move, while over 60 percent claimed it as useless.
Lawmakers were also divided on the latest real estate measures, with the minor opposition Bareunmirae Party’s Ha Tae-kyung criticizing the current administration for prompting a rise in housing prices through “nonsensical measures.” Ha referred to the presidential Chief of Staff Noh Young-min's instructions on Monday to ranking Cheong Wa Dae officials to sell their additional real estate properties in metropolitan areas.
“The latest measures were released when housing prices have soared through nonsensical real estate measures, only fueling public rage. Cheong Wa Dae officials (selling their houses would only mean they will profit from the price rise),” Ha said in a statement posted on Facebook.
The reports and responses come a day after the nation’s financial authorities unveiled strict measures to curb soaring housing prices, pushing for stricter lending rules for real estate purchases, and expanded the adoption of a presale price cap for newly built apartments and an increase in property taxes on multiple homeowners.
by KICN ho jin lee
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