Monday, June 4, 2012

Is Korea at risk of a housing bubble?

The property market is stagnant and needs a jolt. At least, that’s the view of the government, which on May 10 announced measures to boost house sales, particularly in affluent areas of southern Seoul such as Gangnam, Songpa and Seocho.

Within days, however, real estate agents and market observers had labeled the measures, including lowering transaction taxes and easing lending rules, too modest to be effective.

If boosting weak property values is today’s concern, very different fears dominated discussion on real estate until relatively recently. This month two years ago, Hyundai Economic Research Institute warned of a catastrophic collapse of an inflated market without immediate government action. Economist Kim Kwang-soo, the head of think tank KS Economic Research Institute, made similar predictions, claiming that mortgage debt and speculative buying had led to a huge bubble the government could only hide for so long. Read More