GOVT’S REAL ESTATE STATEMENT

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The government issued yesterday a statement about real estate prior to the advance application of apartments in the greater Seoul area. The government plans to stabilize the market by extending the advance application system to other locations, but the plan is not dampening people’s expectation over higher housing prices.

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The advance application for public housing in the capital region began Wednesday. More than 200,000 people viewed the website for the new housing areas. In some areas, the number of applicants outnumbered housing supply. On the same day, the government issued a statement. Current housing prices are overvalued and thus may go down. Authorities also pointed out, housing supply in Seoul and nearby areas is not lacking and that psychological factors may be driving up the prices.

[Soundbite] Hong Nam-ki(Deputy Prime Minister for Economy) : "There is a vague expectations for price increase. It’s important to hold back expectation for excessive gains since housing price fluctuation is greater than before."

The government decided to expand the advance application system to dispel people’s anxiety about housing. This system, which has been used only for public housing so far, will be applied to private apartments built on public housing sites to absorb transaction demand.

[Soundbite] Noh Hyeong-ouk(Minister of Land, Infrastructure and Transport) : "Once a large number of homes are made available, the housing prices may go down more than the market predicted."

An expanded advance application system is expected to ease short-term property purchases. But the system’s effects are limited as the number of available apartments remains the same. As more people wait to purchase housing, the jeonse or property lease market may be affected as well.

[Soundbite] Prof. Kwon Dae-jung(Dept. of Real Estate, Myongji Univ.) : "If the real estate market is to be stabilized, there should be more new apartments. And if housing rental prices are to be stabilized, more apartments must become available for immediate move-in."

Despite repeated government warnings, the housing price outlook index has been rising since April. Experts highlight that tangible results are expected only when the supply plans of new urban development projects are carried out without a hitch.