International Law

It?s a Housing Crash All Right

But not the type that will restore affordability to the expensive Korean housing market.

As it turns out, former President Roh Moo Hyun taking economic advice from Karl Marx may not have helped the housing situation in Seoul after all:

Apartment Supply on Sharp Decline
Maeil Kyungjae (English edition) 11 Mar 2008

Aftereffects of the apartment price cap are being witnessed. Supply of apartment houses is rapidly declining as constructors have virtually stopped selling new apartments under the judgment that it would be difficult to make ends meet under a price cap.

Opposing a large supply of new apartments dodging the price cap from last November to this March, the quantity of supply has halved in April from a year earlier and shrunk 61 percent from a month ago.

Doctor Apartment, a realty information provider, reported Tuesday that apartment houses which are to be sold in April nationwide totaled 20,268 in 54 regions, down 52.4 percent from the previous year?s 42,600 and 61.5 percent from the previous month?s 52,740. Seoul and the nearby regions (11,370) are likely to maintain the previous year?s level (12,669) while other cities and provinces which have already been loaded with unsold apartments will see a large dip in supply.

A recent survey of ten major constructors has also indicated a sharp decline in apartment supply this year.

Ten constructors including Daewoo Construction had supplied total 36,065 apartment houses in the Seoul region last year; however, the supply was forecasted to be reduced to 27,773 this year including 3,571 units in public housing sites; 11,722 in private housing sites; and 12,480 reconstructed apartments.

Really? But price controls are working so well in Zimbabwe.

Full post as published by Korea Law Blog on March 12, 2008 (boomark / email).