By Choi Sung-jin
Amid rising concerns about overheated housing markets in Korea, major foreign investment banks are forecasting the property boom will begin to slow in 2017.
"A majority of overseas investment banks are of the view that the domestic housing boom will reach a peak next year but climb down starting in 2017 owing to supply gluts and restraints in mortgage lending," said the Korea Center for International Finance based its compilation of foreign forecasts.
JP Morgan, for instance, predicted the boom would continue in the short run, but saw the consistent rise in building permits and construction starts, coupled with mortgage regulation, would force it to slow down.
"The increase in housing demand has been thanks to the government's policy and rocketing rents so far, but any prolongation of it will depend on gains in household income," the U.S. investment house was quoted as saying.
These foreign forecasts largely agree with predictions of domestic analysts, who predict problems resulting from oversupply could arise in two to three years when people begin to move into homes they bought this year.
Already, the number of unsold apartments in October amounted to 15,576, up 0.2 percent from September. Banks also will toughen their screening of borrowers' repayment ability next year, making it far more difficult for people to take out loans to buy homes.
According to the Bank of Korea's survey of real estate brokers, 58 percent of respondents expect home prices in Seoul and its vicinity to fall in two or three years with 83.3 percent saying the same for homes in the rest of the country.