It seems that department stores and discount stores did good business during this lunar new year shopping season. Reportedly they sold more gift sets than last year. Traditional markets still did not see enough activity, but overall the signs seem to say that consumption is picking up again. There are positive signs in the area of home debt as well. All that is welcome news in the sense that domestic consumption, the lack of which has been cited as one of the main reasons for the economic slowdown, could be recovering. The government needs to be highly sensitive to the changes so as to keep the embers of recovery alive. If it responds the wrong way at a time like this, it could negatively influence the whole of the economy without ever making use of the opportunity to facilitate any improvement.
The real estate market is one area where the government needs to be especially careful. Real estate is starting to get unsettled with purchasing rights for apartments in Pan'gyo's "New Town" about to go on sale and new reconstruction activity in Seoul's Gangnam neighborhood. The results of a recent study indicating that apartment prices in Seoul are on the rise is a further indication of this. Some financial industry observers are saying that money is leaving banks and heading towards the real estate market. In addition, the moving season is just around the corner. There is no guarantee that speculative real estate investment won't start up again if these many factors start influencing each other. There is no need to go into the problems that would create. Did not the speculative investment craze that overtook Gangnam and beyond a year ago create serious aftereffects for our society?
It looks like the government will have to perform a wholesale review of real estate policy. It has been easing regulations since last year in an effort to "normalize" real estate transactions, saying there weren’t enough of them. A large part of its motive was to stimulate the economy, however, and that, in the end, has contributed to the market restlessness. It is time to look back at the spirit of the "October 29 Measures" of 2003. There is also a need to examine the possibility of a minor adjustment in the interest rate, because low interest rates negatively influence the real estate market by floating a capital without ever bringing about productive investment.
The Hankyoreh, 11 February 2005.
[Translations by Seoul Selection (PMS)]
[Editorial] Hopes About Recovery, Worries About Real Estate |
