This photo taken on Oct. 24, 2022, shows a construction site of an apartment complex in east of Seoul. (Yonhap)
SEOUL, Oct. 27 (Korea Bizwire) — South Korea’s property prices are expected to maintain a downward trend as interest rates are expected to stay high through at least early 2023, a state-run think tank said Thursday.
The average price of houses in the greater Seoul area in the July-September period of 2022 decreased 1.19 percent from the previous quarter, compared to the 0.05 percent on-year drop tallied in the April-June period, according to the data by the Korea Development Institute (KDI).
The average contract price of “jeonse” moved down 1.2 percent on-quarter in the July-September period, the data added.
Under the jeonse system, tenants pay a large lump-sum deposit, known as key money, to the landlord, which is then returned at the end of the rental agreement. During the lease period, the tenants do not pay monthly rent.
The KDI added that volatility in the the housing market is expected to continue, as borrowing costs are set to be adjusted depending on the speed of inflation and other market conditions.
“The housing market, in contrast to the financial market, responds gradually to changes in rates,” the KDI added.
The central bank, meanwhile, has hiked its key policy rate by a combined 2.5 percentage points since August last year to curb inflation, including the second-ever big-step rate increase of 50 basis points to 3 percent early this month.
The central bank is widely expected to deliver another rate increase before the end of this year.
(Yonhap)
