South Korea’s new minister of Land, Infrastructure and Transport Kim Hyun-mee said she smelled speculation behind bubbly housing market and warned of strong clampdown.

Kim said during her inauguration ceremony on Friday that the local housing market has been overheating not because of demand by real home-seekers but because of speculative activities.

According to data released by the ministry of land, housing transactions of homeless households and households owing one home declined 6.02 percent and 1.71 percent respectively in May from a year ago, while those of households owning three or more homes rose. Home transactions of people owning three houses increased 6.19 percent, four houses 4.4 percent and more than five houses 7.47 percent last month.

The trend is especially noticeable in highly speculative Gangnam district, southern Seoul with active redevelopment activities. Trade among households without own homes decreased 3 percent on year in Gangnam-gu and inched up 2 percent in Songpa-gu, whereas that of households owning more than five homes surged 58 percent and 89 percent in Gangnam and Songpa respectively.

In the two areas, home transactions of people who are 29 or younger soared 54 percent from the previous year, compared to 14 percent increase of transactions of those in their 40s and 13 percent in their 50s.

“It is a clear sign of illegal practices as young people with less money are the most active in real estate transactions in the highly sought-after regions,” said Kim, meaning that most of the home transactions by people in their teens and 20s may be made by their parents or grandparents seeking to avoid gift tax.

“Some still suggest the overheated market is caused by supply shortage, but the data clearly showed that demand by real home-seekers didn’t increase,” said Kim. “The real estate policies should be made by the government, not by speculators,” she added, signaling that the government may take additional measures to regulate housing speculation.

By Chung Soon-woo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]