Half of Experts Warn of Prolonged Real Estate Slump

Half of domestic real estate experts say real estate prices have or will soon end 50 years of upward trajectory, meaning property investment is no longer a safe and easy means to earn money.

Even if housing prices fall over the mid to long term, however, a plunge like those seen in Japan in the 1990s is unlikely, they said, adding apartment prices in Seoul will rise over the short term.

These were the results of a Dong-A Ilbo survey conducted Sept. 10-16 on 51 real estate experts in academia, financial institutions and construction companies about their outlooks for the real estate market. The study is the first to have half of domestic real estate experts warn of a prolonged slump in the real estate market, excluding those expecting a drastic plunge.

Eighteen experts predicted an end to the 50-year expansion of the real estate market since the launch of the first five-year economic development plan in 1962. Nine said growth had already ended, seven predicted things to remain the same, and another seven expected continued expansion.

The reasons cited for the prolonged downturn were retirement of the baby boom generation (those aged 47-55), a decline in the population and the number of major home buyers (those aged 35-55), and a change in the general perception of housing including a drop in the desire to own a house.

On how the slump will develop if the market has entered a downward phase, 12 experts predicted a long-term decline amid ups and downs, with the others forecasting a gradual fall. None of the respondents expected a plunge, however.

Experts also warned of the worsening gap among regions, saying the outskirts of the Seoul metropolitan area will be hit hardest by the slump, followed by 10 new cities being built under the government`s second-stage city development including Dongtan, Pangyo and Gwanggyo, five cities of the first-stage development plan including Ilsan, Bundang and Pyeongchon, and districts in Seoul excluding the Gangnam, Seocho and Songpa districts.

Areas that have witnessed a sharp decline were excluded.

Kang Wu-won, a real estate and asset business professor at Sejong Cyber University, said, "The downturn is inevitable since the number of people who can buy homes is declining. The public perception of real estate as an investment should be changed. The government should shift away from a policy of supplying apartments through development of large-scale land and come up with detailed measures based on region-specific characteristics and various housing demand."

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