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bassexpander
Joined: 13 Sep 2007
Location: Someplace you'd rather be.
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 Posted: Fri Oct 03, 2008 2:38 am Post subject: Apartment prices getting insane. 20% increase or more. |
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Well, after my wife and I spent the afternoon checking around, I have to apologize to Cohiba, because apartment prices are seriously out of whack, as he said. We went back and looked at some 32 pyong places that were around 50 million down at 1 million per month near Oksu and Sadang. Now we're talking 1,200,000 to 1,500,000 per place with the same down money. The apartment in Sadang wants 1.2 now, with 100,000,000 down.
We're going to keep looking, but it sounds as if nobody is buying a thing, and everybody is renting -- leaving nothing to be rented but overpriced apartments. We did find one 10-year old building in the range we wanted near Oksu, but it was 1st floor next to screaming waves of kids outside, and falling apart.
My wife says 160,000 brand new apartments in Korea are for sale, but nobody wants to pay the huge prices for them. In the meantime, rentors are trying to squeeze higher prices out of their rental units. Insanely higher prices, from what we're seeing.
Gosh, I hope the bubble breaks soon. |
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wylies99
Joined: 13 May 2006
Location: I'm one cool cat!
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| Posted: Fri Oct 03, 2008 2:40 am Post subject: |
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| The declining value of the won also means that prices climb. |
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bassexpander
Joined: 13 Sep 2007
Location: Someplace you'd rather be.
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| Posted: Fri Oct 03, 2008 2:43 am Post subject: |
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I told my wife I am seriously considering leaving this decent uni job because it'd be better for us if we could live in a cheaper area somewhere East or West of her workplace. Right now, I'm working around Daehangno, and she's near Yaksu. Anything in between seems pretty insane.
Crap, I think I'm going to tell my school that I need more money, because with the apartment prices we're going to have to pay, and the commute, it won't be worth it to stay there!
Meantime, my Korean female friend -- no uni degree -- is making around 2 million as a hagwon teacher. I remember when Korean hagwon teacher salaries were like 1.4 or so. Now they're getting up around 2. She claims others there make 2.5.
Foreigner salaries haven't really moved since 2002 when I got here. |
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Typhoon
Joined: 29 May 2007
Location: Daejeon
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| Posted: Fri Oct 03, 2008 2:50 am Post subject: |
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| In Daejeon the price of a lot of housing is in serious decline. A few years ago the cost was high on speculation of the gov't moving here and there is a serious correction going on now. Cheap places for sure. |
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bassexpander
Joined: 13 Sep 2007
Location: Someplace you'd rather be.
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| Posted: Fri Oct 03, 2008 2:53 am Post subject: |
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I'm hoping that happens in Seoul very soon.... one way or another.
LMB wants to keep building and building. |
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Typhoon
Joined: 29 May 2007
Location: Daejeon
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| Posted: Fri Oct 03, 2008 2:58 am Post subject: |
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| Its got to happen. There are only so many people to fill houses. Once more and more empty houses hit the market prices have to go down. In Daejeon they have two huge major sub-divisions being built right now. I just don't get it. The last major sub-division they built is still 25% empty. Real estate is taking a big hit here and there will come a time when it hits Seoul too. |
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Paddycakes
Joined: 05 May 2003
Location: Seoul
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| Posted: Fri Oct 03, 2008 3:05 am Post subject: |
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| From what I gather, the big companies that own the apartments would rather see them sit empty then drop their asking price. |
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wylies99
Joined: 13 May 2006
Location: I'm one cool cat!
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| Posted: Fri Oct 03, 2008 3:06 am Post subject: |
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| Paddycakes wrote: |
| From what I gather, the big companies that own the apartments would rather see them sit empty then drop their asking price. |
For now. They think all of this economic trouble is temporary. We'll see what they think in a few months. |
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bassexpander
Joined: 13 Sep 2007
Location: Someplace you'd rather be.
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| Posted: Fri Oct 03, 2008 3:07 am Post subject: |
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| Paddycakes wrote: |
| From what I gather, the big companies that own the apartments would rather see them sit empty then drop their asking price. |
That's kind of my fear, |
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bassexpander
Joined: 13 Sep 2007
Location: Someplace you'd rather be.
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| Posted: Fri Oct 03, 2008 3:15 am Post subject: |
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Just found this... maybe we're on the edge of the bubble:
http://www.koreatimes.co.kr/www/news/biz/2008/10/123_32123.html
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Property Market Downturn Deepening
By Jane Han
Staff Reporter
A three-bedroom house in the San Francisco Bay Area that used to cost $650,000 now comes easily at a bargain price of $325,000. A luxury apartment in China's busy Shenzhen reached 800,000 yuan ($117,000) last year, but is now barely 600,000 yuan. In Korea, some of the priciest Gangnam apartments have shed more than 20 percent in value just this year.
From Ireland to India, the house price crash ― once mainly limited to the U.S. ― is now going global, causing a domino effect of plummeting prices, delinquent loan payments and credit crises, all of which add to the ongoing economic slump.
One outright good that comes with this bust is the flood of cheap homes on the market. But given a closer look, the sudden plunge will do more harm than good to the wider economy.
The U.S. financial meltdown, after all, started from none other than falling property values.
The credit crisis was triggered when American homeowners were squeezed by falling home prices and rising interest rates. Borrowers started defaulting and banks started selling off mortgaged properties, and as these started to pile up, prices dropped even more.
This was what Japan experienced when its real estate bubble burst in the 1990s. And as economists raise the specter of a Japan-style lost decade in the U.S., other countries fear that they're following in the wrong footsteps of the world's largest economy.
Strong indicators point to such concerns here on the local front.
Apartment prices in the red-hot, affluent Gangnam are falling below the psychological comfort level. A two-bedroom unit in Bundang ― one of the so-called highly speculative ``Bubble Seven'' districts ― can be purchased for 590 million won now, a lot cheaper than 750 million won just a year ago.
The term ``standard'' price is becoming more and more meaningless as properties are crashing below these once understood values.
Coupled with this are soaring housing loan rates. Certificates of deposits (CD) rates went up Monday to 5.85 percent, which is up 0.85 percentage points from last year. The CD rate is the benchmark for variable-rate housing loans, so the hike means that interest rates on mortgages and other loans will go up.
Recent Bank of Korea data show that the nation's household debt is already high, reaching 283.3 trillion won ― in total ― at the end of June, up 15 percent from a year earlier.
Since property prices are losing value, some homeowners are finding it impossible to pay off their debts, even after selling their home. That is, if they manage to sell it the first place.
``This is why a housing bust has such a thorough, deep-running impact on the general economy,'' said Huh Chan-kook, a senior research fellow at the Korea Economic Research Institute, who added that the dive sets off a vicious cycle.
Such woes aren't just a concern here, as countries all over the world are experiencing a property crash now.
International estate agents Knight Frank said earlier this month that New Zealand, Denmark, Germany, Ireland, Britain, Greece and France are among many countries grappling with plunging home values.
[email protected] |
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wylies99
Joined: 13 May 2006
Location: I'm one cool cat!
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| Posted: Fri Oct 03, 2008 3:15 am Post subject: |
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| They're out of touch with consumers and reality. |
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Join Me
Joined: 14 Jan 2008
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| Posted: Fri Oct 03, 2008 3:15 am Post subject: |
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| Paddycakes wrote: |
| From what I gather, the big companies that own the apartments would rather see them sit empty then drop their asking price. |
I would agree. The rules of economics just don't seem to apply in Korea. Dropping the price of something which is terribly inflated to meet what the market is willing to pay would involve a loss of face. Don't expect to see apartment ("Castle") prices falling anytime soon. |
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Typhoon
Joined: 29 May 2007
Location: Daejeon
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| Posted: Fri Oct 03, 2008 3:23 am Post subject: |
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| If they don't drop them they will eventually be forced due to supply and demand. There just isn't anyone buying the old apartments so people can't move into a new apartment and companies will have huge losses. We are seeing this in Daejeon right now. Housing prices are going down, down, down as people can't wait forever to sell their old apartments in order to pay for their new ones. Prices will go down. The problem is the prices will probably end up being forced down through a market crash. Koreans do love to learn the hard way. |
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semi-fly
Joined: 07 Apr 2008
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| Posted: Fri Oct 03, 2008 3:23 am Post subject: |
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Did you expect with the economy the way it is that apartments even the older and some might call dilapidated apartments wouldn't cost you a song and a dance?
Are you using a service to locate an apartment or are you relying on shoe leather and a good friend to assist you?
OFF TOPIC
When you not your school locates and negotiates the price of an apartment are you the tenant locked into a contract for X amount of months at X amount per month for rent?
Another way of saying that is can your landlord (overlord) charge you W1,000,000 during Jan - May and tell you from June - Dec. you must now pay W1,200,000 and be within his/her legal right? |
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bassexpander
Joined: 13 Sep 2007
Location: Someplace you'd rather be.
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| Posted: Fri Oct 03, 2008 3:27 am Post subject: |
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We check speedbank.co.kr and then go visit the realtors on foot in the areas we're looking.
From what I've seen over the years, Koreans will rebuild a new apartment building as quickly as they are legally able to do so. |
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