Korean real estate: the South still lagging behind
After years of poor performance, Korean real estate continues its period of extreme slowness. Growth that is hard to come, and that has led us to analyze Korean real estate in more detail, which is why today we will tackle as an argument just how South Korea has stood still for all these years. But above all, we will try to understand what the prospects for 2020 may be.
So if you're ready, we can start with the penultimate news of 2019!
Let's start by saying that the political situation in Korea is not at all simple. The new government had the main objective of adopting an innovative tax plan. A real '' new paradigm '', based on a huge investment of 10 billion dollars.
Destination? Greater social security, health and retraining of small and medium-sized enterprises. All this to entice potential buyers to invest in South Korea's real estate. But the high housing costs have generated real '' overheated speculative '' areas. Prices too high, out of reach of the average demand.
The most expensive areas are undoubtedly:
- the capital Seoul (in all its 25 districts)
- Gwacheon
- Sejong City
The last two areas are classified as among the most expensive. But why ? Motivation is simple. The government has (again) introduced a capital gains tax increase for real estate investors. The so-called CGT. It had already been acquired in the period from 2005 to 2014.
But today, investors, owners of two houses, will be subject to an additional tax of 10% more. Furthermore, for the owners of three properties, a 20% increase should be expected, in addition to the aforementioned CGT. In conclusion. A really heavy tax system, which discourages any attempt at growth and improvement for real estate.
Despite this, however, economic growth is timid but present. If we were to make an analysis of the country's economic growth, we would certainly obtain positive results.
In detail :
- 2.1% in the third quarter of 2018,
- 2.9% in the fourth quarter of 2018
- 1.7% in the first quarter of 2019
- 2% in the third quarter of 2019
The growth was sustained above all as regards production and the increase in import-export activities. In addition, GDP grew by 0.5%, thanks to the cut adopted by the Bank of Korea (BOK) in terms of interest rates. Therefore, it is hoped that more economic circulation will continue in 2020 and improve the prospects also for real estate.
We certainly cannot give definitive confirmation to the hypotheses (however positive) that gravitate around South Korea. What we can do, however, is to constantly monitor the situation for you. Always here, in full Realigro style!
So if you're ready, we can start with the penultimate news of 2019!
Let's start by saying that the political situation in Korea is not at all simple. The new government had the main objective of adopting an innovative tax plan. A real '' new paradigm '', based on a huge investment of 10 billion dollars.
Destination? Greater social security, health and retraining of small and medium-sized enterprises. All this to entice potential buyers to invest in South Korea's real estate. But the high housing costs have generated real '' overheated speculative '' areas. Prices too high, out of reach of the average demand.
The most expensive areas are undoubtedly:
- the capital Seoul (in all its 25 districts)
- Gwacheon
- Sejong City
The last two areas are classified as among the most expensive. But why ? Motivation is simple. The government has (again) introduced a capital gains tax increase for real estate investors. The so-called CGT. It had already been acquired in the period from 2005 to 2014.
But today, investors, owners of two houses, will be subject to an additional tax of 10% more. Furthermore, for the owners of three properties, a 20% increase should be expected, in addition to the aforementioned CGT. In conclusion. A really heavy tax system, which discourages any attempt at growth and improvement for real estate.
Despite this, however, economic growth is timid but present. If we were to make an analysis of the country's economic growth, we would certainly obtain positive results.
In detail :
- 2.1% in the third quarter of 2018,
- 2.9% in the fourth quarter of 2018
- 1.7% in the first quarter of 2019
- 2% in the third quarter of 2019
The growth was sustained above all as regards production and the increase in import-export activities. In addition, GDP grew by 0.5%, thanks to the cut adopted by the Bank of Korea (BOK) in terms of interest rates. Therefore, it is hoped that more economic circulation will continue in 2020 and improve the prospects also for real estate.
We certainly cannot give definitive confirmation to the hypotheses (however positive) that gravitate around South Korea. What we can do, however, is to constantly monitor the situation for you. Always here, in full Realigro style!
