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wooden nickels
Joined: 23 May 2010
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 Posted: Wed Dec 12, 2012 2:10 am Post subject: |
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We finally sold our home after almost 2 years of dropping the price. No profit. We sold it for what we paid for it. We were living rent free, but we had to remodel it, and taxes and insurance ate up the potential profit.
Now we have a nicer place with the full deposit down. Then with the remaining money, we put it in the bank and are making about 3.2% interest after taxes are withheld. Now, no property taxes and property insurance, and a reduction in other insurance premiums because we don't own property. Plus many other things to factor in that reduces profit.
Sure there's money to be made in real estate. But it's not easy unless one gets in on a really low purchase price and has most or all of the money up front.
I just don't have the real estate guru in my blood to juggle the risk of the loss.
If I ever buy again, it will be because it's the place I want to live, not a profit venture. |
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wooden nickels
Joined: 23 May 2010
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| Posted: Wed Dec 12, 2012 2:12 am Post subject: |
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| Captain Corea wrote: |
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. |
That's what everyone would ask us, "will you rent it?" |
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12ax7
Joined: 07 Nov 2009
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| Posted: Wed Dec 12, 2012 3:55 am Post subject: |
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| Jimskins wrote: |
| 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.
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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. |
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. |
The stats don't lie. Gwangju has become a 'gwanyeok-shi' and Wonju is on its way to becoming one (fastest growing town in Gangwon, if not Korea). With that comes new and better schools, fancy apartments, and the increase in land value and real estate prices in accordance.
As for your claim that people snicker about education in the provinces...Let them snicker if they want. It doesn't change that there are some morons in Seoul (I should know, a lot of my students are from Seoul). Besides, if a private school in under-construction in a middle-class to upper-middle class neighborhood in a provincial town, it will affect real estate value. So what if an apartment that goes for a million dollars in Gangnam will go for 150 000$ in that smaller town? A 30% increase in the span of a year on an initial 150 000$ investment is nothing to spit on. |
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Jimskins
Joined: 07 Nov 2007
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| Posted: Wed Dec 12, 2012 5:08 am Post subject: |
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| No, it isn't if you can get it. I will keep my eye on Wonju. Sick of living in Seoul and always liked that part of Korea. |
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12ax7
Joined: 07 Nov 2009
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| Posted: Wed Dec 12, 2012 12:32 pm Post subject: |
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| Jimskins wrote: |
| No, it isn't if you can get it. I will keep my eye on Wonju. Sick of living in Seoul and always liked that part of Korea. |
Keep in mind that not all neighborhoods in Wonju or Gwangju are good investments, though. You really have to do your research. If you're serious, go see one of those real estate consultants, not a real estate broker. They'll be able to point you in the right direction.
But, I think it's very hard to make a wise investment in a town you don't have any connections to, friends or relatives who can give you the scoop on which neighborhood is hot and where they'll be building a new school, library, department store or a large chain supermarket, all of which drive up real estate value. |
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AbbeFaria
Joined: 17 May 2005
Location: Gangnam
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| Posted: Thu Dec 13, 2012 6:11 am Post subject: |
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| I asked my friend about his apartment and how he set it up. He said it was 매매 and they didn't require the 50-80% but that it was optimal. He's a foreigner, an American, and he got the loan for he remainder. He had a little over 20% for his down payment. So it's possible. |
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Lazio
Joined: 15 Dec 2010
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| Posted: Thu Dec 13, 2012 6:27 am Post subject: |
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| AbbeFaria wrote: |
| I asked my friend about his apartment and how he set it up. He said it was 매매 and they didn't require the 50-80% but that it was optimal. He's a foreigner, an American, and he got the loan for he remainder. He had a little over 20% for his down payment. So it's possible. |
Do not buy an apartment with 20% down payment! You say you need 100 million. Is that so hard to save at least half of that for two people in 2-3 years?
First tier banks: Woori, Hana, KB, Shinhan will not lend you that much. Smaller banks might do it but the interest will be much higher (around 7%). You will end up with a monthly interest payment similar to paying weolse while the apartment value will not increase nearly that much.
I�m not sure if your girlfriend is Korean or not. If she is and you will get married before the apartment purchase than as a multicultural family you (well, it�s rather she) will be eligible for government supported mortgage and jeonse loans with very low interest rates. |
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12ax7
Joined: 07 Nov 2009
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| Posted: Thu Dec 13, 2012 6:31 am Post subject: |
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| Lazio wrote: |
| AbbeFaria wrote: |
| I asked my friend about his apartment and how he set it up. He said it was 매매 and they didn't require the 50-80% but that it was optimal. He's a foreigner, an American, and he got the loan for he remainder. He had a little over 20% for his down payment. So it's possible. |
Do not buy an apartment with 20% down payment! You say you need 100 million. Is that so hard to save at least half of that for two people in 2-3 years?
First tier banks: Woori, Hana, KB, Shinhan will not lend you that much. Smaller banks might do it but the interest will be much higher (around 7%). You will end up with a monthly interest payment similar to paying weolse while the apartment value will not increase nearly that much.
I�m not sure if your girlfriend is Korean or not. If she is and you will get married before the apartment purchase than as a multicultural family you (well, it�s rather she) will be eligible for government supported mortgage and jeonse loans with very low interest rates. |
They most certainly lend that much, and more. If you pay 7% interest, you've been had. |
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AbbeFaria
Joined: 17 May 2005
Location: Gangnam
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| Posted: Thu Dec 13, 2012 6:34 am Post subject: |
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| Lazio wrote: |
| AbbeFaria wrote: |
| I asked my friend about his apartment and how he set it up. He said it was 매매 and they didn't require the 50-80% but that it was optimal. He's a foreigner, an American, and he got the loan for he remainder. He had a little over 20% for his down payment. So it's possible. |
Do not buy an apartment with 20% down payment! You say you need 100 million. Is that so hard to save at least half of that for two people in 2-3 years?
First tier banks: Woori, Hana, KB, Shinhan will not lend you that much. Smaller banks might do it but the interest will be much higher (around 7%). You will end up with a monthly interest payment similar to paying weolse while the apartment value will not increase nearly that much.
I�m not sure if your girlfriend is Korean or not. If she is and you will get married before the apartment purchase than as a multicultural family you (well, it�s rather she) will be eligible for government supported mortgage and jeonse loans with very low interest rates. |
I wasn't intending to go with the bare minimum, just pointing out that at least at whatever bank my friend used, the 50% and up was not required. |
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PatrickGHBusan
Joined: 24 Jun 2008
Location: Busan (1997-2008) Canada 2008 -
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| Posted: Thu Dec 13, 2012 8:18 am Post subject: |
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| Captain Corea wrote: |
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. |
Not to mention the economy is not booming job-wise and the fact the buying price for even a tiny apt in Seoul is out of their reach financially. |
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jvalmer
Joined: 06 Jun 2003
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| Posted: Thu Dec 13, 2012 6:57 pm Post subject: |
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| 12ax7 wrote: |
| The stats don't lie. Gwangju has become a 'gwanyeok-shi' and Wonju is on its way to becoming one (fastest growing town in Gangwon, if not Korea). |
Just a little nitpicking here.
Wonju is far off from becoming a 'gwangyeok-shi'.
Cities tend not to be designated 'gwangyeok-shi' until it hits a population of 1 million. And there are 2 or 3 cities in Gyeonggi-do have surpassed that mark, but will not be designated 'gwangyeok-shi' due to Gyeonggi-do's opposition due to the loss of tax revenues. I highly doubt a new city will be designated a new 'gwangyeok-shi', unless it's a very special exception like that Sejong city that was supposed to be the new capital.
Anyways, carry on with your debate... |
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piyopayo
Joined: 13 Sep 2010
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| Posted: Sat Jan 12, 2013 4:33 am Post subject: |
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My husband is Korean and he said that now is not the best time to buy an apartment because apartment prices are getting lower and lower. This means that you will probably lose money if you buy now and planning to sell it in a few years. You are better off with cheonsae (the large deposit with no monthly rent option).
My gyopo friend bought an apartment 4 years ago in the Mokdong area with her husband and is now stuck paying off over 1.1 million won a month for the mortgage. She said she can't sell it because they would lose too much money. It's a do or die situation for her now. |
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