September 24, 2020 12:46
Apartment prices in Seoul continue to soar amid an endless slew of government regulations to curb real-estate speculation, pricing out of most younger people's reach.
The average price of an 84 sq.m apartment, which is the most in demand, has surpassed W600 million -- the "affordable average price" by the government's barometer for housing-loan eligibility -- according to Kookmin Bank on Wednesday (US$1=W1,164).
Half of all apartments that size in the capital cost less than W600 million when President Moon Jae-in took office in 2017, but since then 23 sets of measures intended to tame the real-estate market have badly misfired and jacked up prices.
The swish Gangnam district of southern Seoul has the most expensive apartments at an average of W1.94 billion, followed by neighboring Seocho with W1.88 billion. The price of some newly-built apartments there has soared to more than W3 billion, but the average price was lower due to the existence of older and cheaper apartments in those areas.
Next was Songpa, also in southern Seoul, where the average price was W1.52 billion, followed by Yongsan just north of the Han River, neighboring Seongdong, Yangcheon in southwestern Seoul and Mapo in central Seoul. Overall the average apartment price in Seoul stood at W1.08 billion, up a staggering 55.5 percent from only three years ago.
In August of 2017 the average price in 12 of Seoul's 25 districts was less than W600 million, but now there is none. In 31 districts of Gyeonggi Province surrounding Seoul it also surpassed W600 million.
Analysts say the trend is fueled by soaring demand as people rush to buy apartments while they still can amid ever tighter restrictions. The government has slapped various curbs on apartments costing more than W900 million by labeling them "high-priced" even though they are now no longer anything to write home about. The measures have led to high demand for apartments worth less than W600 million, especially among people in their 30s and 40s without huge cash savings, as they can still get housing loans with lower interest.
For example, a couple whose combined annual income is less than W80 million can take out a housing loan worth 50 percent of the value, compared to 40 percent for others. That rises to 70 percent or up to W300 million for those on even lower incomes.
The acquisition tax on an apartment costing less than W600 million is just 1.1 percent for a single home owner, compared to 3.3 percent for an apartment costing more than W900 million.
Shim Kyo-eon at Konkuk University said, "The government should be more realistic when it comes to the types of apartments that are eligible for tax or loan benefits, because apartment prices have increased so sharply. At present, only first-time home buyers can benefit, so being more flexible with regulations will not fuel real estate speculation."
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