Busan property market rebounds while Seoul`s remains cold

Han Hye-seung, a 42-year-old housewife who recently began looking for an apartment in Busan`s Haeundae district, was surprised to know that GS Engineering & Construction’s premium apartment in the Haeundai Xai complex cost up to 80 million won (74,108 U.S. dollars) above the initial sale price.

“I could feel the temperature difference in the property market, as my apartment in Seoul was not sold even at a low price but the prices of Haeundae apartments has risen a lot," she said.

The average price of a Busan apartment is nearly 6.48 million (6,021 dollars) per 3.3 square meters these days, up 23.4 percent from June. Lee Yeong-rae, head of the Busan and South Gyeongsang Province office of Real Estate 114, a major provider of property pricing data, said that apartment builders began to raise new apartment prices about 20 percent from May, which were offered at the price levels of three to four years ago until April.

"I`m worried over the possibility of a price bubble because of oversupply,” he added.

Despite soaring property prices in Busan, the real estate market in Seoul remains cold. According to property data providers, potential buyers have been taking a wait-and-see attitude since the government’s announcement of new rental apartments at attractive locations.

Dr. Apartment, a real estate information service provider, said Seoul’s Gangdong district and Gwacheon, Gyeonggi Province, saw their apartment prices fall 0.37 percent on average, the biggest drop in the Seoul and Gyeonggi areas, after the government announced that it would build rental apartments there.

As apartment prices in Seoul’s Seocho and Gangnam districts also continued to fall, the average sale price of apartments in Seoul was 0.9 percent lower in June than that of a year earlier.

In contrast, apartment rental prices in Seoul surged significantly. The rental price of a 110 square-meter unit of the Dogok Rexle apartment complex jumped by 62.5 million won (57,890 dollars) in just one week, while that of Ssangyong 1st complex rose 35 million won (32,422 dollars) over the same period.

Certain areas in Seoul could see increases in property prices. Jang Seong-su, head of research at the Korean Housing Institute, said the prices of small and medium-size apartments will begin to rebound due to rising demand caused by demographic changes.