Provinces forgotten in real estate boom

Daegu, Busan, Gwangju all see stagnant markets while Seoul's soars

Cho, 46, an executive at a small South Korean company, turns the TV channel whenever news about the real estate market comes on. First off, he does not understand what it is all about. More than that, he just feels angry.

Late last year, Cho moved into an apartment in the southern port city of Busan. He bought the apartment for 310 million won (US$320,000), but including taxes and expenses for renovation, the price went up to 330 million won. The size was similar to his old residence, but he made the purchase in consideration of its potential worth on the market, as it had a better location.

A few days ago, however, he was shocked to see a newspaper report which showed that apartment prices outside of Seoul have dropped as much as 10 million won. He did not expect the price would go down so that sharply.

"I heard that the government would impose high taxes on property worth more than 600 million won. You cannot find such an expensive home in Busan," Cho said. "Despite high taxation, people can earn more money (through investment in real estate) than what they earn through working. I do not understand why people in the Gangnam district complain about a rise in taxes." The Gangnam district is an area below the Han River in Seoul, and is regarded as a hotbed of real estate speculation.

With housing prices in Seoul remaining high, people in provincial areas feel like they are living in a different world. Some of them say they feel like "second-tier citizens" because of the severe disparity of their investment when compared to investments made by others in the housing market in Seoul. If one sets the 2000 price of an apartment in Gangnam and South Jeolla Province at 100, its price today in Gangnam would be 366.41 while in Jeolla it would only be 101.89.

"You can find many unsold apartments in Gwangju, so I am speechless to hear that the prices of houses in Seoul shoot up overnight," Lee Ki-hun, 35, who lives in the provincial city. "People in local areas feel deprived, as if money is just slipping from their hands."

Things are no different in the southern city of Daegu. "Though there are a lot of unsold apartments here, there is little transaction, and the real estate market is in a slump," a real estate expert said. "The government's real estate policies are focused only on the Seoul metropolitan area."

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