Polarization in housing prices has deepened this year as government-led clampdown on real estate fueled and centralized demand in Seoul whereas hurting most other areas across the nation.
According to data from Korea Appraisal Board, 14 out of 17 metropolitan cities and provinces showed a steep decline in apartment prices from January to September this year. Apartment price gain in Incheon, North Jeolla Province and Jeju that hovered below the inflation rate of 1.9 since the beginning of last year turned negative from this year. Housing prices in Busan and Gangwon Province also fell 3.26 percent and 3.71 percent, respectively, over the same period after rising slightly faster than average inflation last year.
Things have gone from bad to worse for South Gyeongsang Province and Ulsan, hit by a double whammy of sluggish shipbuilding and machinery industries that have been the two pillar industries for the regions and the government’s hardened real estate regulations. House prices in South Gyeongsang Province and Ulsan plummeted by a respective of 8.34 percent and 8.26 percent during the January to September period, showing a faster drop compared to the last year`s fall of 2.86 percent and 1.43 percent. Apartment prices in North Gyeongsang Province fell 3 percent, North Chungcheong Province 5.26 percent and South Chungcheong Province 5.09 percent.
Gyeonggi Province, areas surrounding Seoul, saw its housing prices grow at a slower pace of 1.18 percent compared to the last year’s 1.25 percent, while apartment prices in Incheon tumbled 3.26 percent. In particular, housing prices in Inchoen’s Yeonsu Disctrict, where bustling business area Songdo is located, slipped 0.66 percent during the last nine months, after picking up 2.4 percent over the same period last year.
Seoul alone remained heated. Apartment prices soared 7.03 percent over the cited period this year, more than doubling last year’s 3.04 percent growth pace.
Critics say that the government’s strengthening regulations to cool down the overheated property market has backfired, widening the housing price gap between Seoul and other regions. The government last month announced it would double the property tax on multiple home owners in speculative areas and restrict them from taking out mortgage loans to clamp down on the real estate market. The measure only concentrated demand in Seoul with landlords dumping assets elsewhere to buy instead a single expensive home in the capital.
By Park In-hye and Choi Mira
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]