In contrast to the assertion of Mr. Jasper Kim about the forthcoming Korean property bubble, Korea is not actually among those countries, as there is an increase in the prices of real estate.
An increase in real-estate prices are taking place across Asian countries, with Hong Kong, having 20 percent increase from their low in 2006, Taiwan with 10 percent increase and Singapore with 16 percent. Such increase mirrors the impact of fiscal stimulus programmes and global monetary moderation.
The extensively used real-estate price index in Korea indicates that on the average, there was a two percent increase in national prices during the previous month from their low in 2009. This, however, is way under the level of last year. Prices in Seoul have grown by three percent from their 2009 low.
Just like what Mr. Kim has pointed out, Seoul indeed has some “hot” spots. In the district of Kangnam, prices of apartments have grown by seven percent relative to their low. Compared to their nominal income by the end of 2002, prices of apartments in Kangnam were lower in the middle of 2009.
These figures are the same with the published report of the Bank for International Settlements last October 2008 as well as with the released report of the International Monetary Fund last August.
“A look at house prices relative to income over a longer period shows that they are still more affordable compared with the early 1990s, even for the faster growing districts of Seoul," concludes the International Monetary Fund.
As banks in Korea have once again stepped up issuance of deposit certificates and boosted their confidence on wholesale funding, the sharp increase in credit costs reflect liquidity tightening.
Another factor that has added to the growing interest-rate pressure is the release of monetary stabilisation bonds related to the intervention of the central bank in the foreign-exchange market.