(Korea) Bubble or no: What's really going on in real estate?
joongangdaily.joins.com
November 11, 2006 ? Is a bubble about to burst on the Korean real estate market?
That is the question on the minds of many real estate experts here. As yes-or-no questions go, this one has not been answered with any clarity by economists and academics.
Choi Ho-sang, a researcher at Samsung Economic Research Institute, said there is a bubble in the local real estate market. He said low interest rates in the early 2000s led to overheating of the property market, eventually causing the bubble.
The Bank of Korea has also argued for the existence of a bubble, saying since 2001, apartments across the nation have been selling at prices about 8 percent higher than their actual value.
Lee Yong-man, dean of Hansung University's Graduate School of Real Estate, begged to differ.
In his recent contribution to the Internet home page of a think tank, Center for Free Enterprise, Mr. Lee wrote that the factors that have been known to cause bubbles in Gangnam areas, such as highly-regarded high schools, are the same ones that actually increased the inherent value of houses in the area. In other words, he wrote, "There are actual reasons, not just speculation, that drove up housing prices."
On the same Web site, however, Rhee Jeong-jeon, a Seoul National University professor, countered Mr. Lee's point. He said the rising of real estate prices has been due to growing speculative demand among those hoping to profit from increasing prices, and added if the prices continue to rise, it would only attract more speculators.
The government has been no more certain about the bubble question. In a July report, the Finance Ministry wrote that other than prices for some homes in the Gangnam area, the chances for bubbles in Korea remain slim. But the Blue House yesterday urged people not to buy houses now because of their high prices. |
