Homeowners Not Selling As Prices Rise

Homeowners Not Selling As Prices Rise. September. 13, 2006 03:01. higgledy@donga.com abc@donga.com.

These days, the shopping centers attract the attention of real estate capitalists the most as they are not subject to the comprehensive real estate tax. Amid tons of requests to purchase shopping centers for one to five billion won at real estate private banking (PB) centers, there is not much available supply. Kim Yong-hwan at Woori Bank’s PB Center said, “Demand for shopping centers increased from late last year, leading to higher prices, but presumptions prevail that they will soar even more. That is why endless request calls are on the way for shopping centers investment.”

The government expects an influx of available real estate offerings as the year ends because those who own two or more houses will have to pay a higher real estate transfer tax, that is, 50 percent of the transfer gains, if they sell their house starting from next year. However, most real estate PB centers say that not many of the multiple-home owners will sell their house. Park Hap-soo at Kookmin Bank’s PB Center said, “Most of the current multiple-home owners have already decided not to sell any.” Lee Nam-soo at Shinhan Bank’s PB Center said, “Most of these owners think, ‘There is no need to sell if the transfer tax is high. The property tax could come from lease fees, i.e., monthly rents or full-deposit system.’”

The government predicts that housing prices will be stabilized continuously, but real estate capitalists fully stick to their belief that real estate investment never fails. It is said that “previous lessons” reveal that house prices have continued to soar despite various tough measures on the real estate, including the “October 29th Housing Market Stabilization Measures” and last year’s “August 31st Comprehensive Real Estate Measures.” Kim Il-soo at Hana Bank’s PB Center said, “Many customers expect an ease in regulations in the first half of next year,” adding, “Prices of buildings soon to be rebuilt are said to have decreased, but there aren’t many people who want to sell their soon-to-be-rebuilt apartments.”

Pangyo New Town of Seongnam, Gyeonggi Province is also the center of focus among real estate capitalists. Around seven to eight out of 10 inquiries related to real estate purchases are on the town. Mr. Kim at Woori Bank’s PB Center said, “Many customers are collecting information and preparing themselves for the National Tax Office’s launch of an audit of sources for operation funds when their child with no income wins a prize for apartment subscriptions and the amount of gift tax that would be imposed.”