House prices were up 4.73% y-o-y in Q3 2020
South Korea’s housing market is strengthening after several years of lacklustre performance. House prices rose by 4.73% during the year to Q3 2020, sharply up from the previous year’s 0.83% growth and its highest growth in 13 years. During the latest quarter, house prices increased 1.57% from the previous quarter.
Housing restraint, economic stimulus
Elected on the promise of ending cosy ties between business and government, South Korea's current government launched a fiscal plan that President Moon Jae-in called 'a complete paradigm shift' based on US$9.85 billion extra spending, especially on social security, health, and small businesses, which will raise growth to 3%.
High housing costs are a political issue, so the government is targeting the "overheated speculative zone", comprised of the capital Seoul (all 25 districts) and two other areas -- Gwacheon and Sejong City. For those areas they've re-introduced increased capital gains tax (CGT) on property investors, originally introduced 2005-2014. Investors who own two houses pays an extra 10% in capital gains tax upon the sale of a property. Three-house owners can expect an extra 20% tax, in addition to baseline CGT of between 6-40%, depending on the size of the gain and the holding period.
Rents, rental yields: data unavailable in S. Korea
Recent news. South Korea’s trade-reliant economy returned to modest growth in Q3 2020, as exports started to recover. GDP grew by 1.9% in Q3 from the previous quarter - the fastest quarterly expansion since Q1 2010. Compared with a year ago, however, the economy shrank 1.3% in Q3 2020, following an annual decline of 2.7% in Q2.
South Korea’s economy is projected to contract by 1.3% this year, potentially its worst performance in more than two decades, according to the BOK. The economy grew by 2.7% in 2018 and by 2% in 2019.
