New property curbs unleashed in Seoul and other cities
Pedestrians crossing the street near Gangnam Station in Seoul. Vincent St. Thomas/Shutterstock
Taking its cue from neighbouring China, the South Korean government launched last week a set of property curbs to calm down frothy home prices in its largest cities.
The measures will stabilise the housing market by “suppressing speculative investors and favoring real homebuyers,” the Ministry of Land, Infrastructure and Transportation said in a statement.
“We plan to take preemptive measures to stabilise the property market in all of Seoul, Sejong, and parts of Gyeonggi province and Busan, to make sure the market is focused on actual demand,” outgoing finance minister Yoo Il-ho said.
One of the targets of the cooling measures is the contentious practice of trading purchasing rights, which the ministry has banned in eight cities, the Nikkei Asian Review reported. Purchasing rights, designed as certificates of entitlement for the purchase of a particular property, are often resold at a premium in the secondary market, making them too expensive for many first-time homebuyers.
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Prospective buyers of Seoul homes will be required not to sell their properties for as long as 18 months from the date of purchase, the ministry announced. Downpayments will also be raised to 10 percent of housing values, as consumers continue to exploit easy access to credit and nationwide household debt increases to record highs.
Mortgage interest rates in the country hover as low as 2 to 3 percent, with the central bank keeping benchmark rates at 1.25 percent. Meanwhile, household debt peaked at KRW1,257.3 trillion (USD1.1 trillion) in June.
Apartment values in Seoul’s famous Gangnam area alone are estimated to be 10 times pricier than the country average. Prices in the district soared 5.8 percent in the first 10 months of 2016 from the same period last year.
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Source : property-report.com
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