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Apartment values in Korea

Value of 'bubble seven' apartments is triple the national average

The combined value of apartments in the nation's seven most speculation-prone districts account for nearly 30 percent of the total value of apartments across the nation, data showed yesterday.

The average apartment price in the so-called "bubble seven" areas is triple the national average. The number of apartments in the seven districts is less than a tenth of the nation's total, according to property market information provider Real Estate Service Inc.

The appraised value of the apartments in the seven areas - Seoul's Gangnam, Songpa, Seocho and Mokdong districts and the three satellite towns around the capital of Bundang, Pyeongchon and Yongin - totaled 357.7 trillion won. The sum accounts for 29.1 percent of the nation's total value of apartments of 1,229 trillion won. That represents a gain of 3.7 percentage points over two years and four months from 25.4 percent in January 2004.

The appraised value of Gangnam apartments topped the list with 99.9 trillion won, followed by Yongin (60.3 trillion won), Bundang (58.6 trillion won), Seocho (56.5 trillion won), Songpa (55.2 trillion won), Mokdong (17.6 trillion won) and Pyeongchon (10.3 trillion won).

The total number of apartments in the "bubble seven" districts, 545,296 units, represents only 9.6 percent of the nation's total, indicating the extraordinarily high property prices of these areas.

The Korean economy faces a long-term struggle with an asset bubble, U.S. investment bank Morgan Stanley's chief economist for the Asia Pacific region Andy Xie noted in a recent report. "Aging and a strong currency are causing capital to flow into property, especially high-end property, similar to what occurred in Japan," Xie said. "While speculation is a major factor in the property market, the government should address demand for luxury properties in a maturing, aging and cash-rich economy to root out the fundamental cause of the bubble."

As for the appraised value of apartments in metropolitan cities and provinces, Seoul took the lead with almost 500 trillion won, followed by Gyeonggi Province (391 trillion won), Busan (63 trillion won), Incheon (53 trillion won) and Daegu (47 trillion won). No single municipality across the country excluding Seoul and Gyeonggi Province surpassed the single district of Gangnam in Seoul in terms of the aggregate value of apartments.

posted by Syam @ 9:37 AM