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Jimskins
Joined: 07 Nov 2007
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 Posted: Sun Dec 09, 2012 7:15 pm Post subject: |
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| No_hite_pls wrote: |
| PRagic wrote: |
Wow, 100 million? Pohang is cheap! Good for you and your soon to be wife. In nice areas of Seoul, that wouldn't cover cheonsay on a decent 2 bedroom! Cheonsay on 3 bedroom apartments where we live are at 300 million+ for about 33 Pyung.
But, yes, the system is pretty straight forward when you buy, although a bit reversed from the US system. In the US, you qualify for a mortgage (or prequalify) and THEN you can buy. Here, you agree to buy and THEN go in to qualify for a mortgage, at least in many instances. Your future better half sounds good with the coin in that by having at least 50%, you're more apt to qualify for a loan on a 100 million won purchase.
Good luck to you. Personally, I wouldn't buy anything in Seoul as prices are heading south with no end in sight, but Pohang may be different. Ask your future wife to do some serious checking before you commit to the buy; renting or cheonsay might be better. At only 100 million to begin with, there might not be much room to go lower. Find out about historical trends there as a first step, do your research, and go into the deal with both eyes wide open. |
IMO 300 million for a three bedroom is cheap for city the size of Seoul if the apartment is of good quality. That's the problem in Korea many apartments you can buy now will not be livable in twenty years. I want an apartment that will last. For 270,000 USD I could buy nothing but a studio apartment in my home town and maybe half of a studio in my wife's hometown.
Koreans spend the lowest in OCED on housing as a percentage of their income. Look it up if don't believe me. Because of this I believe the housing market in Korea has the potential for some further growth. |
Yeah I'm with Captain on this one. After most people's parents give them the Jonsei they just have to keep matching the increase every two years. Jonsei rates are increasing fast (ours went up 35% this year) and more people are shifting to Wolsei because of this but in 'normal' times the Jonsei rate increases around 10% per year.
Also that 300 million figure is for Jonsei, so if you wanted to buy it would be double that, by today's exchange rate 555,000 USD. Still cheap?
And that 300 million figure is low, in our area in Seoul that apartment would be twice the price. |
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Jimskins
Joined: 07 Nov 2007
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| Posted: Sun Dec 09, 2012 7:22 pm Post subject: |
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| jvalmer wrote: |
| Captain Corea wrote: |
| No_hite_pls wrote: |
I looked it up anyway.
"households on average spend 16% of their net disposable income on keeping a roof over their heads, the lowest level in the OECD, where the average is 22%."
The housing market is not expensive in Korea compared to their income.
http://www.oecdbetterlifeindex.org/topics/housing/ |
I'm sorry but.. that is bogus.
Look at the cost of an average place in Seoul. Look at the size.
Now look at the average wage in Seoul - see how your 16% doesn't totally add up. |
It makes sense if you include the whole country. Housing outside of the Seoul/Gyeonggi regions is generally pretty affordable (in that 150k-250k for a 4-room), about half the populations lives in those cheap regions. |
Although this is true too. I'm always amazed at the prices when I go to my old neighbourhood Daegu, yeah it's not the best area and we now live in one of the most expensive places in Seoul, but still the difference in price is around x6. |
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Captain Corea
Joined: 28 Feb 2005
Location: Seoul
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| Posted: Sun Dec 09, 2012 7:46 pm Post subject: |
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| jvalmer wrote: |
| Captain Corea wrote: |
| No_hite_pls wrote: |
I looked it up anyway.
"households on average spend 16% of their net disposable income on keeping a roof over their heads, the lowest level in the OECD, where the average is 22%."
The housing market is not expensive in Korea compared to their income.
http://www.oecdbetterlifeindex.org/topics/housing/ |
I'm sorry but.. that is bogus.
Look at the cost of an average place in Seoul. Look at the size.
Now look at the average wage in Seoul - see how your 16% doesn't totally add up. |
It makes sense if you include the whole country. Housing outside of the Seoul/Gyeonggi regions is generally pretty affordable (in that 150k-250k for a 4-room), about half the populations lives in those cheap regions. |
I'd guess though that the wages are also similarly lower in those regions.
Again, I think the key is not a wage-to-price comparison, but to also factor in other living standards - size, density, etc.. |
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12ax7
Joined: 07 Nov 2009
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| Posted: Mon Dec 10, 2012 1:08 pm Post subject: |
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| Jimskins wrote: |
| Whatever you do, don't buy an apartment in Korea. It would be madness to do so now or for the forseeable future based on the state of the market, get jonsei. |
Not at all. It depends how well you do your research and where you buy, like anywhere else in the world. |
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Jimskins
Joined: 07 Nov 2007
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| Posted: Mon Dec 10, 2012 1:44 pm Post subject: |
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I'm sorry but Korea is a special case and not like anywhere else in the world. The last 15 years has seen a massive over-supply of housing (with construction companies unbelievably still being bailed out by the government) coupled with falling demand both in the short term (due to a real estate bubble), the medium term (korea has a massive debt problem) and most importantly the long term (as the birth rate slowly reduces the population to 50% of what it is now -unless they do something drastic like abolish university tuition fees).
Not to mention other reasons such as in Korea as an apartment gets older it loses value (Koreans like new stuff) and whereas in the bubble years a construction company might redevelop it, these days none have the money to do so and there is little profit to be made (은마 apartments in Gangnam are a perfect example of this).
Of course i shouldnt generalize about every broken down shack in the middle of nowhere, but at least for the most popular housing in Korea -an apartment in a city-this is true.
Go to any city in Korea and you will see forests of unsold apartments. DO NOT BUY AN APARTMENT IN KOREA.[/i] |
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Hugo85
Joined: 27 Aug 2010
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| Posted: Mon Dec 10, 2012 3:15 pm Post subject: |
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| Jimskins wrote: |
| No_hite_pls wrote: |
| PRagic wrote: |
Wow, 100 million? Pohang is cheap! Good for you and your soon to be wife. In nice areas of Seoul, that wouldn't cover cheonsay on a decent 2 bedroom! Cheonsay on 3 bedroom apartments where we live are at 300 million+ for about 33 Pyung.
But, yes, the system is pretty straight forward when you buy, although a bit reversed from the US system. In the US, you qualify for a mortgage (or prequalify) and THEN you can buy. Here, you agree to buy and THEN go in to qualify for a mortgage, at least in many instances. Your future better half sounds good with the coin in that by having at least 50%, you're more apt to qualify for a loan on a 100 million won purchase.
Good luck to you. Personally, I wouldn't buy anything in Seoul as prices are heading south with no end in sight, but Pohang may be different. Ask your future wife to do some serious checking before you commit to the buy; renting or cheonsay might be better. At only 100 million to begin with, there might not be much room to go lower. Find out about historical trends there as a first step, do your research, and go into the deal with both eyes wide open. |
IMO 300 million for a three bedroom is cheap for city the size of Seoul if the apartment is of good quality. That's the problem in Korea many apartments you can buy now will not be livable in twenty years. I want an apartment that will last. For 270,000 USD I could buy nothing but a studio apartment in my home town and maybe half of a studio in my wife's hometown.
Koreans spend the lowest in OCED on housing as a percentage of their income. Look it up if don't believe me. Because of this I believe the housing market in Korea has the potential for some further growth. |
Yeah I'm with Captain on this one. After most people's parents give them the Jonsei they just have to keep matching the increase every two years. Jonsei rates are increasing fast (ours went up 35% this year) and more people are shifting to Wolsei because of this but in 'normal' times the Jonsei rate increases around 10% per year.
Also that 300 million figure is for Jonsei, so if you wanted to buy it would be double that, by today's exchange rate 555,000 USD. Still cheap?
And that 300 million figure is low, in our area in Seoul that apartment would be twice the price. |
10%? In 5 year that would bring 300m to 483m.... |
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12ax7
Joined: 07 Nov 2009
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| Posted: Mon Dec 10, 2012 6:28 pm Post subject: |
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| Jimskins wrote: |
I'm sorry but Korea is a special case and not like anywhere else in the world. The last 15 years has seen a massive over-supply of housing (with construction companies unbelievably still being bailed out by the government) coupled with falling demand both in the short term (due to a real estate bubble), the medium term (korea has a massive debt problem) and most importantly the long term (as the birth rate slowly reduces the population to 50% of what it is now -unless they do something drastic like abolish university tuition fees).
Not to mention other reasons such as in Korea as an apartment gets older it loses value (Koreans like new stuff) and whereas in the bubble years a construction company might redevelop it, these days none have the money to do so and there is little profit to be made (은마 apartments in Gangnam are a perfect example of this).
Of course i shouldnt generalize about every broken down shack in the middle of nowhere, but at least for the most popular housing in Korea -an apartment in a city-this is true.
Go to any city in Korea and you will see forests of unsold apartments. DO NOT BUY AN APARTMENT IN KOREA.[/i] |
Nonsense. I'm not talking about buying the first thing you see just because it's within your budget. If you do your homework well, you can make a nice chunk of change in real estate. |
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jvalmer
Joined: 06 Jun 2003
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| Posted: Mon Dec 10, 2012 6:36 pm Post subject: |
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| I'm one of the few that plan on buying to live. That means 30+ years. I have no desire for extra 'income' property. |
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Jimskins
Joined: 07 Nov 2007
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| Posted: Mon Dec 10, 2012 8:30 pm Post subject: |
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| 12ax7 wrote: |
| Jimskins wrote: |
I'm sorry but Korea is a special case and not like anywhere else in the world. The last 15 years has seen a massive over-supply of housing (with construction companies unbelievably still being bailed out by the government) coupled with falling demand both in the short term (due to a real estate bubble), the medium term (korea has a massive debt problem) and most importantly the long term (as the birth rate slowly reduces the population to 50% of what it is now -unless they do something drastic like abolish university tuition fees).
Not to mention other reasons such as in Korea as an apartment gets older it loses value (Koreans like new stuff) and whereas in the bubble years a construction company might redevelop it, these days none have the money to do so and there is little profit to be made (은마 apartments in Gangnam are a perfect example of this).
Of course i shouldnt generalize about every broken down shack in the middle of nowhere, but at least for the most popular housing in Korea -an apartment in a city-this is true.
Go to any city in Korea and you will see forests of unsold apartments. DO NOT BUY AN APARTMENT IN KOREA.[/i] |
Nonsense. I'm not talking about buying the first thing you see just because it's within your budget. If you do your homework well, you can make a nice chunk of change in real estate. |
Due to lack of any counter-arguments to my points, I'll have to assume that either:
1. You are foolish enough to have already bought property in Korea and are now sweating on it,
or
2. You are the type of chap who claims they have a 'system' for beating roulette in the casino.
jvalmer- yeah I'm the same as you, been looking at building our own house in the countryside or getting one of those 땅콩집s. I just don't want to sink that much cash into it as -in investment terms- I'll probably never see most of it ever again. For a nice-ish house it's going to cost around 3-400 million, that's the absolute max I'd ever spend on a house in Korea no matter how much I had. Buying a house in Korea these days is almost akin to buying a car; Jonsei is a great system to me and I'll stick with it as long as i can. |
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12ax7
Joined: 07 Nov 2009
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| Posted: Tue Dec 11, 2012 2:49 pm Post subject: |
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| Jimskins wrote: |
| 12ax7 wrote: |
| Jimskins wrote: |
I'm sorry but Korea is a special case and not like anywhere else in the world. The last 15 years has seen a massive over-supply of housing (with construction companies unbelievably still being bailed out by the government) coupled with falling demand both in the short term (due to a real estate bubble), the medium term (korea has a massive debt problem) and most importantly the long term (as the birth rate slowly reduces the population to 50% of what it is now -unless they do something drastic like abolish university tuition fees).
Not to mention other reasons such as in Korea as an apartment gets older it loses value (Koreans like new stuff) and whereas in the bubble years a construction company might redevelop it, these days none have the money to do so and there is little profit to be made (은마 apartments in Gangnam are a perfect example of this).
Of course i shouldnt generalize about every broken down shack in the middle of nowhere, but at least for the most popular housing in Korea -an apartment in a city-this is true.
Go to any city in Korea and you will see forests of unsold apartments. DO NOT BUY AN APARTMENT IN KOREA.[/i] |
Nonsense. I'm not talking about buying the first thing you see just because it's within your budget. If you do your homework well, you can make a nice chunk of change in real estate. |
Due to lack of any counter-arguments to my points, I'll have to assume that either:
1. You are foolish enough to have already bought property in Korea and are now sweating on it,
or
2. You are the type of chap who claims they have a 'system' for beating roulette in the casino.
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You know very little about Koreans and Korean society if you can't recognize the factor which drives real estate values the most here.
Tell me, what is arguably the primary concern of Korean parents, particularly those who've become successful through education?
I've said enough. You're smart enough to figure out the rest by yourself. |
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Jimskins
Joined: 07 Nov 2007
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| Posted: Tue Dec 11, 2012 8:59 pm Post subject: |
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| 12ax7 wrote: |
| Jimskins wrote: |
| 12ax7 wrote: |
| Jimskins wrote: |
I'm sorry but Korea is a special case and not like anywhere else in the world. The last 15 years has seen a massive over-supply of housing (with construction companies unbelievably still being bailed out by the government) coupled with falling demand both in the short term (due to a real estate bubble), the medium term (korea has a massive debt problem) and most importantly the long term (as the birth rate slowly reduces the population to 50% of what it is now -unless they do something drastic like abolish university tuition fees).
Not to mention other reasons such as in Korea as an apartment gets older it loses value (Koreans like new stuff) and whereas in the bubble years a construction company might redevelop it, these days none have the money to do so and there is little profit to be made (은마 apartments in Gangnam are a perfect example of this).
Of course i shouldnt generalize about every broken down shack in the middle of nowhere, but at least for the most popular housing in Korea -an apartment in a city-this is true.
Go to any city in Korea and you will see forests of unsold apartments. DO NOT BUY AN APARTMENT IN KOREA.[/i] |
Nonsense. I'm not talking about buying the first thing you see just because it's within your budget. If you do your homework well, you can make a nice chunk of change in real estate. |
Due to lack of any counter-arguments to my points, I'll have to assume that either:
1. You are foolish enough to have already bought property in Korea and are now sweating on it,
or
2. You are the type of chap who claims they have a 'system' for beating roulette in the casino.
|
You know very little about Koreans and Korean society if you can't recognize the factor which drives real estate values the most here.
Tell me, what is arguably the primary concern of Korean parents, particularly those who've become successful through education?
I've said enough. You're smart enough to figure out the rest by yourself. |
Yeah, I don't know anything about Korean society.
*SIGH*
Education is important and has caused price spikes in certain areas with good schools in the past, but you're missing the big picture, the most important thing to Koreans is not education, it's money, and protecting that money, with a solid education being seen as the most reliable route to becoming rich. A good education in itself is not the ultimate goal, having a sizeable pile of gold in the bank is. In this society money is everything, it can buy influence, protect and advance your family's interests and generally resolve almost any problem.
Korean's (at least the over-30s) are a nation of savers and although will (and do) invest heavily in education there is a limit and that limit is facing losing hundreds of millions of won on their properties.
Let me give you an example. My parents-in-law live between Jamsil-dong and Daechi-dong, as someone with far superior knowledge to my ignorant self you'll know that this is the number one education hotspot in Seoul, the best hogwans, schools, tutors etc. They have been trying to sell their apartment for 3 years. In that time it has fallen in value by almost 30%. They still can't sell it. My mother in law recently enquired at the local Budongsan as to how many apartments of a similar size in their complex (there's around 600) had been sold in the past year. "1" the agent replied.
So just to clarify, apartments on the market in the (education-wise) most desirable location in Korea are not selling at a 30% discount. So much for "the factor which drives real estate values the most around here."
I wish you were right, I really did. My parents own half a dozen properties in the UK and have made a lot of money off buy-to-let and house price rises. Property has always been a solid long-term investment in England, but in Korea it's extremely risky at best. |
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Captain Corea
Joined: 28 Feb 2005
Location: Seoul
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| Posted: Tue Dec 11, 2012 9:44 pm Post subject: |
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Yup - I know tons of people that have been trying to sell their places in/around Seoul for the past few years - nothing. Not one bite. They've dropped asking 10, 20, 30 %
Nothing.
Put it up for rent... gone in a week.
People are gun shy about buying right now. |
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Unposter
Joined: 04 Jun 2006
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| Posted: Tue Dec 11, 2012 11:41 pm Post subject: |
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It is hard (I might even say impossible) to argue that buying real estate anywhere in Korea is not a "risky" (a word I have come to hate because of its relative and hard to fathom meaning) investment. And, of course, investment is also relative, especially for real estate, which can both a residence and an investment, with short-term and long-term implications.
Anyway, if you are looking at a short-term, relatively easy to liquidate, investment, real estate, even in the best neighborhoods of Seoul, would be hard to argue as a good idea.
As some posters have pointed out, people aren't buying and there tends to be two reasons for this: 1) the market is oversaturated and 2) the rent to own ratio too strongly favors renting.
So, it should not be a surprise that rents are increasing, somtimes dramatically in high demand areas. Eventually, rents will increase enough (assuming no government interference) that owning will again seem like the better option.
At that time, buyers will wish they had bought now when the market was down (at least in high demand areas which should be able to keep and increase their value over the long term). This is the hard part of buy low sell high theory. The reason you can buy low is that everyone else is looking at it as a bad investment but if it has long term potential then this is the best time to buy.
I would not argue that all real estate in Korea is a good buy but I suspect that the better neighborhoods in Seoul will be able to keep or even increase their value over the medium term. Even if population drops, Seoul is still Seoul, and the good neighborhoods will have the highest demand and maintain the highest values.
But, if you are talking about land outside Seoul, I would be deeply concerned about maintaining value. I don't think it can be done without a baby boom or a more open immigration policy (which believe it or not is a possibility).
But, if you were talking land in the "Gangnam" area of Seoul, if I had the cash burning a whole in my pocket, I'd buy at 30% off. In th short tem, you could either make money through rent or residing their yourself and in the long term, it should be a decent deal depending on what other options for that cash burning a whole in your pocket could be invested in.
But, if you are not planning to be a long term resident of Korea or if you are not in the financial situation to be a long term investor, I'd stay as far away from real estate as I could.
But, for those of you who do see yourself as long term residents, your children may be very happy you bought prime location real estate in Korea. It will be an investment that could pay off for generations, especially considering the low real estate taxes in Korea (at least compared to where I am from). |
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12ax7
Joined: 07 Nov 2009
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| Posted: Wed Dec 12, 2012 12:34 am Post subject: |
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| Jimskins wrote: |
| 12ax7 wrote: |
| Jimskins wrote: |
| 12ax7 wrote: |
| Jimskins wrote: |
I'm sorry but Korea is a special case and not like anywhere else in the world. The last 15 years has seen a massive over-supply of housing (with construction companies unbelievably still being bailed out by the government) coupled with falling demand both in the short term (due to a real estate bubble), the medium term (korea has a massive debt problem) and most importantly the long term (as the birth rate slowly reduces the population to 50% of what it is now -unless they do something drastic like abolish university tuition fees).
Not to mention other reasons such as in Korea as an apartment gets older it loses value (Koreans like new stuff) and whereas in the bubble years a construction company might redevelop it, these days none have the money to do so and there is little profit to be made (은마 apartments in Gangnam are a perfect example of this).
Of course i shouldnt generalize about every broken down shack in the middle of nowhere, but at least for the most popular housing in Korea -an apartment in a city-this is true.
Go to any city in Korea and you will see forests of unsold apartments. DO NOT BUY AN APARTMENT IN KOREA.[/i] |
Nonsense. I'm not talking about buying the first thing you see just because it's within your budget. If you do your homework well, you can make a nice chunk of change in real estate. |
Due to lack of any counter-arguments to my points, I'll have to assume that either:
1. You are foolish enough to have already bought property in Korea and are now sweating on it,
or
2. You are the type of chap who claims they have a 'system' for beating roulette in the casino.
|
You know very little about Koreans and Korean society if you can't recognize the factor which drives real estate values the most here.
Tell me, what is arguably the primary concern of Korean parents, particularly those who've become successful through education?
I've said enough. You're smart enough to figure out the rest by yourself. |
Yeah, I don't know anything about Korean society.
*SIGH*
Education is important and has caused price spikes in certain areas with good schools in the past, but you're missing the big picture, the most important thing to Koreans is not education, it's money, and protecting that money, with a solid education being seen as the most reliable route to becoming rich. A good education in itself is not the ultimate goal, having a sizeable pile of gold in the bank is. In this society money is everything, it can buy influence, protect and advance your family's interests and generally resolve almost any problem.
Korean's (at least the over-30s) are a nation of savers and although will (and do) invest heavily in education there is a limit and that limit is facing losing hundreds of millions of won on their properties.
Let me give you an example. My parents-in-law live between Jamsil-dong and Daechi-dong, as someone with far superior knowledge to my ignorant self you'll know that this is the number one education hotspot in Seoul, the best hogwans, schools, tutors etc. They have been trying to sell their apartment for 3 years. In that time it has fallen in value by almost 30%. They still can't sell it. My mother in law recently enquired at the local Budongsan as to how many apartments of a similar size in their complex (there's around 600) had been sold in the past year. "1" the agent replied.
So just to clarify, apartments on the market in the (education-wise) most desirable location in Korea are not selling at a 30% discount. So much for "the factor which drives real estate values the most around here."
I wish you were right, I really did. My parents own half a dozen properties in the UK and have made a lot of money off buy-to-let and house price rises. Property has always been a solid long-term investment in England, but in Korea it's extremely risky at best. |
In other words, you're knowledge of real estate in Korea is limited to the fact your in-laws invested in an already over-saturated area in Seoul, one where prices are such that demand has fallen (and so people don't see potential for growth). Besides, how far is your in-laws apartment from the good schools? Just because it's in the general area doesn't mean its' a good investment. I'm talking of real estate on the same road as the schools, three roads ("lines") away at most.
Moreover, you don't buy in an area where the prices are already high anymore. Nowadays, the name of the game is buying ahead of the rush (buy low, sell high). That's why Seoul, in my opinion, is yesterday's news. If you want profits, look at Kwangju in Cholla or Wonju in Gangwon, for example. People are moving from Seoul to those towns. They are fast growing towns, median income is going up since government and corporate offices have been moving there over the last few years. Lots of money to be made if you're savvy enough to buy at the right place and the right time. |
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Jimskins
Joined: 07 Nov 2007
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| Posted: Wed Dec 12, 2012 2:09 am Post subject: |
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| 12ax7 wrote: |
| Jimskins wrote: |
| 12ax7 wrote: |
| Jimskins wrote: |
| 12ax7 wrote: |
| Jimskins wrote: |
I'm sorry but Korea is a special case and not like anywhere else in the world. The last 15 years has seen a massive over-supply of housing (with construction companies unbelievably still being bailed out by the government) coupled with falling demand both in the short term (due to a real estate bubble), the medium term (korea has a massive debt problem) and most importantly the long term (as the birth rate slowly reduces the population to 50% of what it is now -unless they do something drastic like abolish university tuition fees).
Not to mention other reasons such as in Korea as an apartment gets older it loses value (Koreans like new stuff) and whereas in the bubble years a construction company might redevelop it, these days none have the money to do so and there is little profit to be made (은마 apartments in Gangnam are a perfect example of this).
Of course i shouldnt generalize about every broken down shack in the middle of nowhere, but at least for the most popular housing in Korea -an apartment in a city-this is true.
Go to any city in Korea and you will see forests of unsold apartments. DO NOT BUY AN APARTMENT IN KOREA.[/i] |
Nonsense. I'm not talking about buying the first thing you see just because it's within your budget. If you do your homework well, you can make a nice chunk of change in real estate. |
Due to lack of any counter-arguments to my points, I'll have to assume that either:
1. You are foolish enough to have already bought property in Korea and are now sweating on it,
or
2. You are the type of chap who claims they have a 'system' for beating roulette in the casino.
|
You know very little about Koreans and Korean society if you can't recognize the factor which drives real estate values the most here.
Tell me, what is arguably the primary concern of Korean parents, particularly those who've become successful through education?
I've said enough. You're smart enough to figure out the rest by yourself. |
Yeah, I don't know anything about Korean society.
*SIGH*
Education is important and has caused price spikes in certain areas with good schools in the past, but you're missing the big picture, the most important thing to Koreans is not education, it's money, and protecting that money, with a solid education being seen as the most reliable route to becoming rich. A good education in itself is not the ultimate goal, having a sizeable pile of gold in the bank is. In this society money is everything, it can buy influence, protect and advance your family's interests and generally resolve almost any problem.
Korean's (at least the over-30s) are a nation of savers and although will (and do) invest heavily in education there is a limit and that limit is facing losing hundreds of millions of won on their properties.
Let me give you an example. My parents-in-law live between Jamsil-dong and Daechi-dong, as someone with far superior knowledge to my ignorant self you'll know that this is the number one education hotspot in Seoul, the best hogwans, schools, tutors etc. They have been trying to sell their apartment for 3 years. In that time it has fallen in value by almost 30%. They still can't sell it. My mother in law recently enquired at the local Budongsan as to how many apartments of a similar size in their complex (there's around 600) had been sold in the past year. "1" the agent replied.
So just to clarify, apartments on the market in the (education-wise) most desirable location in Korea are not selling at a 30% discount. So much for "the factor which drives real estate values the most around here."
I wish you were right, I really did. My parents own half a dozen properties in the UK and have made a lot of money off buy-to-let and house price rises. Property has always been a solid long-term investment in England, but in Korea it's extremely risky at best. |
In other words, you're knowledge of real estate in Korea is limited to the fact your in-laws invested in an already over-saturated area in Seoul, one where prices are such that demand has fallen (and so people don't see potential for growth). Besides, how far is your in-laws apartment from the good schools? Just because it's in the general area doesn't mean its' a good investment. I'm talking of real estate on the same road as the schools, three roads ("lines") away at most.
Moreover, you don't buy in an area where the prices are already high anymore. Nowadays, the name of the game is buying ahead of the rush (buy low, sell high). That's why Seoul, in my opinion, is yesterday's news. If you want profits, look at Kwangju in Cholla or Wonju in Gangwon, for example. People are moving from Seoul to those towns. They are fast growing towns, median income is going up since government and corporate offices have been moving there over the last few years. Lots of money to be made if you're savvy enough to buy at the right place and the right time. |
Not quite, I've lived in two other cities in Korea, and know the property markets in them well enough to know this downward spiral is not limited to Seoul. One of the decent schools I mentioned is in my in-laws' apartment complex, but that's neither here nor there as people generally move to be in the catchment area, not to be on the same street as the school.
I agree with you that Seoul is finished and any opportunity is to be found elsewhere. I too thought the government's policy of decentralising might open up property investment opportunities in the likes of Sejong City but there are problems with this too.
Firstly it seems to be all show and no substance: I teach at a government agency which is scheduled to relocate to some small town outside of Daejon in two years. When I asked my students if they were excited to move down there all but one admitted they have no intention of leaving Seoul and moving down there. They told me they are not required to move and that the commute on the KTX from their homes was less than 2 hours. Ok you can't get everywhere in Korea by a 2 hour commute on the KTX but you can cover a pretty big chunk of it. People will not move with the jobs.
Secondly -as students at another big corporation pointed out- by putting a time limit for moving on god know how many million square metres of office space in Seoul any private corporations that were thinking of moving out of Seoul to save costs don't need to anymore because it's bargain bucket time on all those shiny government buildings that have to be sold.
Another more important point -and again, as you stressed education for driving property prices- how are you going to change people's mentality that educational establishments in the countryside -i.e. anywhere outside Seoul- are poor quality compared to the capital's? As you know so much about Korea you will be aware of the way Seoul-ites snicker about schools in the country and 지방대s. In the high school in Daegu I taught at out of 600 students in the third grade about 25 or less made it to Seoul. If you're educated in Seoul and don't make it to a Seoul Uni most of the people around you will consider you a bit of a dunce. It's also a chicken and egg problem. Do you honestly think Mrs Kim in Gangnam is going to relocate to Wonju because they claim they've got a good school and will open up lots of shiny new hogwans the instant everyone gets of the bus?
It's a nice idea but it's going to take decades to get it off the ground. By that time they'll be such an over-supply of housing in Seoul (and less competition for Uni places at the good schools) that it will be a waste of time. Heck it was only recently that Saenuri and Minju dang were squabbling over whether to continue building Sejong City or continue with the whole relocation plan. Farce follows farce in this country, and no amount of hair-brained schemes will fix the birth-rate issue which is fundamental to the health of the long-term property market. |
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