Thursday, December 24, 2009

Seoul apartment prices up 23.7% in 9 months

Apartment prices in the capital Seoul rose 23.7 per cent in the first nine months of the year, South Korean government data released for the first time yesterday showed, 10 times as fast as a private bank reported earlier.

The Ministry of Land, Transport and Maritime Affairs said in a statement that the wide difference did not mean that previous figures from Kookmin Bank, the country’s top mortgage lender, were incorrect but reflected a different calculating method.

It said that the government data was based on prices by actual buyers reported to the authorities whereas Kookmin’s figures were based on surveys of realtors.

Official data showed that apartment prices in the capital, where about one-fifth of South Korea’s population lives, fell 18.9 per cent during the July-December 2008 period whereas Kookmin data showed that prices dropped just 2.5 per cent.

Real estate prices in emerging economies are closely watched by investors because any sign of building asset price bubbles on the back of fast economic recovery could prompt policymakers to tighten monetary policy.

South Korea’s central bank warned in September that it would raise interest rates if real estate prices and mortgage lending growth accelerated, though it stepped back later after the government imposed lending controls.

The Bank of Korea has held its benchmark seven-day repurchase agreement rate steady at record-low 2.0 per cent for the past 10 months and is widely expected to begin raising it from early 2010 in line with the recovering economy.

Source: Business Times, 24 Dec 2009

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