Posted on : Sep.3,2005 07:06 KST Modified on : Sep.3,2005 07:11 KST

Housing prices in Seoul's Geoyeodong and Macheondong are skyrocketing in the wake of the release of the government's "August 31 Real Estate Measures." 25 pyeong apartments in Geoyeodong that were W250 million have jumped to W300 million, and industry insiders say that tiny "villas" or "independent units" of around 10 pyeong in size in areas slotted to become "New Towns" are rising in price at an even faster pace. The aftereffects of the government's announcement are serious, but they were somewhat expected.

If you look at the situation with a cool head, it is impossible for areas or surrounding areas to reap the benefits of development once the development plans have been announced. The problem is one of the degree of seriousness, sustainability, and whether there are other effects. As of now it looks too serious to judge the situation. Price are skyrocketing but they're the asking prices, not prices that are part of actual transactions. Furthermore the "New Town" in Songpagu involve the use of government and other public lands, so the situation is different than it has been for Pan'gyo, where land compensation allowed for higher prices in surrounding areas. For the moment it looks like the higher prices are the result of expectant homeowners and a few speculative real estate investors. It would be hasty to say that's a "serious aftereffect" of the "August 31 Real Estate Measures" and demand changes in government policy. Overreaction on the part of the media could encourage speculation.

There is, however, a need to thoroughly weed out the elements who would like to take advantage of the situation and engage in speculation. The government says it is going to take a hard-line stance, sending National Tax Service personnel to investigate what's going on and by designating the areas special zones where you're required to report real estate transactions. It shouldn't just bluff, it needs to take the strongest possible measures allowed by law so as to deal a serious warning to speculative investors. Discouraging the desire to engage in speculation will be most critical. That will require swift agreement about the government's measures regarding real estate, so as to erase all uncertainties. The government has to be ready to raise interest rates. It might be worth considering adopting a system of transaction permits for housing just as with land in areas scheduled for development, so as to prevent the same commotion from happening the next time around.

The Hankyoreh, 3 September 2005.


[Translations by Seoul Selection (PMS)]

related stories
  • 오피니언

multimedia

most viewed articles

hot issue