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6 in 10 Koreans believe house prices will fall

Six in 10 South Koreans planning to buy homes believe house prices will start to fall in the second half of this year, as rising interest rates will worsen repayment burdens, according to a survey by local property technology firm and listing platform Zigbang.

In a survey conducted on 1,727 Zigbang app users from June 20 to July 4, 1,069 respondents (61.9 percent) said they expect the prices of houses in their neighborhood to fall, amid speculation over a sharper-than-expected rate hike the central bank is set to approve Wednesday to tame persistent inflation.

More people living in Seoul and its surrounding areas of Incheon and Gyeonggi Province -- where demand continues to outstrip supply, fueling soaring prices -- are betting on falling prices than those living elsewhere. More first-time home buyers forecast a housing price fall than those with homes.

Apartment prices in Apgujeong-dong, a wealthy neighborhood in Gangnam-gu, southern Seoul, dropped as much as 300 million won ($230,000) in June from the previous month. The fall is seen as a sign of a price slowdown.

Aside from repayment burdens, the respondents cited shrinking demand, an economic downturn and increased home supply prompted by relaxed property curbs as factors contributing to a potentially cooling housing market in the months to come.

Meanwhile, more respondents expected to see a drop in the cost of “jeonse,” where tenants pay a lump-sum cash deposit to rent a home and receive it back once the standard two-year contract expires.

There are more jeonse landlords, and tenants are increasingly finding monthly rentals more appealing than the two-year deals, according to the survey. Monthly rentals were preferred over jeonse in January-May this year for the first time, according to the Land Ministry.

Zigbang said factors such as a rate hike, inflation, and a downturn would sap demand and bring home prices down. How the eased property curbs would affect the market remains to be seen, it added.

By Choi Si-young (