hankyoreh

High-rise apartment complexes in Seoul’s Mapo District are seen in this undated file photo. (Kim Myoung-jin/The Hankyoreh)

The US Federal Reserve took its third consecutive “giant step,” raising the standard interest rate by 0.75 percentage points once again. How much the decision will impact the Korean real estate market is drawing interest.

According to the real estate industry on Thursday, predictions indicate that, while housing prices are stabilizing domestically, they may drop even more drastically if domestic interest rates see steep increases. Some suggest that the apartment market in the Seoul metropolitan area, which saw dramatic price increases in the past one to two years, may take a direct hit.

While apartment prices in the Seoul metropolitan area have been falling for seven consecutive months, sales numbers have been sluggish, and the price drop has been not-so-significant.

However, the real estate industry analyzed that if interest rates increase even more steeply and the economic situation worsens, intensifying the economic slump caused by inflation, housing prices in major Seoul metropolitan areas may hugely fluctuate.

Statistical trends concerning recent housing prices also raise eyebrows. According to the Korea Real Estate Board’s Thursday report, sales prices for apartments nationwide this week dropped by 0.19% from the previous week, a record interval since the organization started studying market prices for apartments 10 years and four months ago, on May 7, 2012.

Apartment sales prices in Seoul dropped for the 17th consecutive week. Apartment sales prices in the Seoul metropolitan area as a whole dropped by 0.23%, a record in 10 years and one month.

The real estate industry projects that urgent sales will make up most of the market for quite some time. Park Won-gab, a senior real estate researcher at KB Kookmin Bank, commented, “Although the government is attempting to revitalize real estate transactions recently, it won’t be able to overcome concerns of interest rate hikes and an economic slump.”

Park added, “Real sales in the Seoul metropolitan area will continue to fall for the foreseeable future.”

By Choi Jong-hoon, staff reporter

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