January 10, 2020 12:22
Apartment prices in Seoul have increased at the fastest clip in the world over the last three years and are now the fourth most expensive on the globe. That is faster than New York, Paris, London and Tokyo.
According to online database Numbeo, the average price of an apartment in Seoul's city center last year stood at US$15,321 per sq.m, the fourth highest among 390 cities in the world. Seoul ranked 14th for apartment prices until 2016 but has had the unenviable honor of joining the top five since President Moon Jae-in took office three years ago.
Prices in the capital soared 44.2 percent over the last three years, the fastest clip among the 10 largest cities. In comparison, prices in New York increased 14.5 percent and in Paris 16.5 percent while falling 5.6 percent in Tokyo.
In Hong Kong and Vancouver prices grew 29.3 percent and 32.1 percent amid rampant real estate speculation by rich mainland Chinese, but they still pale in comparison to Seoul.
Apartment prices in urban areas serve as a leading index of overall real estate prices due to the fact that values rise first in posh areas and spread out.
Paradoxically, the surge here happened because the government attempted to curb rising property values, but it did so by suppressing new housing supply and thereby drove up demand.
Numbeo gets its information from various private-sector and government data that users provide. For Seoul it appears to have based its data on the posh Gangnam area of southern Seoul since a city center usually is the most expensive part.
Hong Kong came first with an average of $30,822 per sq.m, followed by Singapore with $19,858 and London with $17,142. Among the top 10 were Beijing, Shenzen and Shanghai in China, New York and San Francisco in the U.S., and Geneva in Switzerland.
The growth in apartment prices far outstripped increases in salaries here. The price-income ratio or PIR for Seoul apartments rose from 16.6 in 2016 to 20.7 last year. That means households must save up for 21 years without spending a penny to afford an apartment in the capital.
Over the same period, even the PIR of London, the world's worst speculation hub, fell from 33.5 to 21.9 as Brexit scared off some plutocrats, while it dropped from 21.6 to 11.1 in New York and from 26 to 13.8 in Tokyo.
Experts cite policy failures as the main reason for the surge here. The Moon Jae-in government has announced tougher measures to stabilize housing prices more than a dozen times since it took office in 2017, but almost none worked, instead pushing them further up every time.
- Copyright © Chosunilbo & Chosun.com