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A construction company employee explains to the gathered potential customers what kind of apartments will be provided.
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Looking to sell to the highest bidder, owners push prices skyward
Thirty-three-year-old Sin recently gave up a 220-million won (US$230,000) contract to buy a 23-pyeong (76 sq. m.) apartment in Bundang, south of Seoul. The apartment’s owner demanded Sin allow him to tack an additional 30 million won onto the sale price, or Sin could drop the contract and be paid 20 million won in indemnities. Sin eventually scrapped the contract, but although he pocketed 20 million won because of the owner’s breach of contract, he may find it difficult to find a similar apartment nearby in his price range. Sin said that apartment owners have colluded to fix the prices above 300 million won, citing the necessity of paying real estate brokerage fees. Amid surging housing prices, some apartment owners in Seoul and its environs have significantly increased their selling price. In some areas, housewives have banded together to try to send the sale price of their properties skyward. The move has spilled over into small and medium-sized apartments that had originally not been affected by recent real-estate price hikes. For example, in Seoul’s northern Nowon district, residents are urged by community internet sites to sell their properties at 30 to 40 million won above market value. The site also advises sellers there to field calls from brokers by boosting their price the same amount, in order to encourage inflated trading prices. A real estate broker in Nowon said, "The practice of collusion in order to raise prices in Sang-dong and Jung-dong of Bucheon last summer is now being revived in Nowon." Real estate brokers who do not cooperate with owners’ demands will be ousted, the broker said. Guri, Gyeonggi Province, was also singled out as one of the areas affected by price collusion. The bidding price for a 25-pyeong apartment there is as much as 400 million won. For a 32-pyeong apartment, the bidding price is set at 600 million won. Also, amid the soaring housing prices there, there were reports of contract cancellation similar to Sin’s experience. Some homeowners have been accused of trying to sell their apartments for excessive prices. In the case of a 33-pyeong apartment in Seoul’s Mapo district, the price is now set at 800 million won. A real estate broker in the district said the price was 680 million won a month ago, saying the owners had since boosted the price. [englishhani@hani.co.kr]
