Reading Reaction Journal #2

Reference: Kim, M.Y. (2009, April 07). 73 Percent of Foreigners Think Seoul is Expensive. In Korea Times. Retrieved April 7, 2009 from
http://www.koreatimes.co.kr/www/news/nation/2009/04/117_42766.html


Summary:

In Kim Meeyoo’s article “73 Percent of Foreigners Think Seoul is Expensive,” she states that above seventy two third of foreigners, living in Seoul, responded that general prices, especially housing costs in Seoul, seem expensive. Moreover, the inhabitable environment ranked high for satisfaction levels, however, the economic environment and the environment of foreign language service were low. Forty five percent of foreigners have perceived that living in Seoul with their kids is good for their education.

Reaction:

In Korea, especially in Seoul, as far as I know the housing prices have been swelled for a long time. Many past Presidents have tried to reduce the inflated price of housing, but nothing has changed. The housing policies were changed many times; however, the prices were not decreased. The supply of housing has increased annually, but there are still problems. According to principles, increasing supply leads to decreasing demand. But, in the housing field it is a little different. That is because, houses cannot be replaced by other houses. This means, if I want to purchase a house is located in a specific site, it can’t be replaced by other houses. I want to buy a house that is nearby the 63 building, not just a house is located at any other site. So, the location of a house can affect the housing prices. Also, generally people buy houses for selling, not living. They want to buy it more cheaply, and they resell it to other people. They usually aim for a marginal profit. So even if the policy is changed many times, the price of the housing, especially located in a special place, will not go down. Nowadays, the Korean government has a solution which is pulling up the possession fee. It is kind of tax that is charged to people who have more than one house. I think it can be used to decrease the prices of housing. For example, if I have two houses, I have to bear the tax for possession of the house. It will be a progressive tax, so someone who has three or four houses pays more than people who have one extra house. It would be hard to renovate at those prices, but the housing markets need some sort of response like this. I hope the price will be stable soon.