Real Estate News - Korea - Overseas Real Estate Purchases Decline on Subprime Woes
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.
Article by: Lee Hyo-sik - www.koreatimes.co.kr