The price of an apartment unit in Gangnam, which cost 3.5 million won per 3.3 square meters 30 years ago, shot up to 42.5 million won last year.
Prices have increased by more than ten times in 30 years.
The government has come up with various regulations to stop the rise in housing prices in Gangnam, but the effectiveness of these plans is questionable.
Bae Sahm-jin has more.
Eunma Apartment was given a permit for reconstruction last year.
The price for a 101 square meter unit was 75 million won in 1988 but sold at 1.47 billion won last year.
The price has nominally increased by about 18 times over 30 years.
The sale price for every 3.3 square meters at Sinbanpo Central Xi, which recorded the highest competition rate of 168:1, was 42.5 million won. Even smaller apartment units with an area of 59 square meters were priced at around 1.1 billion won.
This is why many claim that purchasing real estate in Gangnam is a solid investment.
The government decided to implement new DTI regulations that lower standards for mortgages and the transfer tax system this coming April.
The 8/2 plan designated the Gangnam area as a speculative zone and established a directive to sell previously owned homes if a person wishes to purchase a house by taking out a mortgage.
The reselling of ownership was prohibited, and only those without housing or those who only own a single house and are moving between houses are permitted to purchase houses.
<Park Won-gap / KB Bank Senior Technical Expert> “People are showing tendencies to retract by owning only a single home for residential purposes rather than owning multiple houses due to mortgage regulations and heavy taxation, and this is making people shift towards Gangnam…”
Furthermore, the system for restitution of reconstruction gains is projected to tie down the reconstruction market in a wait-and-see attitude for a while, and the increase of property taxes this year could act as a huge burden to people with multiple homes as comprehensive real estate holding taxes rise even more.
Government policies could be a factor in stopping the price from increasing, but many projections indicate that it is difficult to expect a decrease in prices in Gangnam since supply is significantly lacking compared to demand.
Bae Sam-jin reporting for Yonhap News TV.
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