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South Koreans' purchase of overseas real estate has continued
to decrease over the past few months on growing concerns about the state
of the global economy. The U.S. economy has become stagnant since the
middle of last year when the housing market plunged as a result of subprime
mortgage defaults.
The sluggish U.S. housing market has dampened investors' sentiment
here as the country is the most popular destination for overseas property
investment by local individuals and businesses.
According to the Ministry of Strategy and Finance Wednesday, local
residents purchased homes and other properties in foreign countries
worth $45 million last month, down from $52 million a month earlier.
The number of transactions totaled 147 in February, compared with 123
in January, and the average property transaction was worth $300,000,
down from $420,000.
By country, the number of property purchases by Koreans rose to 70
in Malaysia and other Southeast Asian countries last month, unchanged
from the previous month. Transactions in the United States increased
to 38 from 25.
``The subprime mortgage problem has cooled South Koreans' appetite
for overseas property investment. Despite government deregulation, people
have become reluctant to buy foreign real estate as the subprime problems
have caused a significant drop in U.S. home prices,'' a ministry official
said.
Property purchases abroad fell below $100 million to $89 million in
August for the first time in four months and have since continued on
a downward curve as the fallout from the U.S. high-risk home loan default
problem has spread to the rest of the world.
The government eased restrictions on property investment overseas early
last year, allowing Koreans to invest up to $3 million in overseas real
estate. There is no ceiling if the acquisition is for residential purposes.
It plans to scrap the cap on overseas property investment this year.
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Newsletter:
19 March to 26 March 2010 - ST Helena Bay, West Coast, Western Province, South Africa
