Plummeting home transactions are forcing removals companies and realtors out of business, while those who manage to hang on are cutting costs drastically.
Interior decorators and home appliance retailers, who enjoyed bumper sales in lockdown, are also suffering from waning demand and rising raw material costs.
According to the Korea Real Estate Board on Thursday, only 155,987 apartments were sold nationwide in the first five months of this year, almost half of the volume seen a year ago and the lowest on record for the time of year.
In Seoul 7,917 apartments were sold, a mere third of the volume a year ago.
Movers and real estate agents have been hit hardest. Not only has the number of apartment sales plummeted, so has the number of transactions for monthly rent and jeonse or Korean-style deposit lease.
Some 110,000 estate agents in the country had to divide business up between them. At Helio City, a vast apartment complex in Songpa in southern Seoul with the single biggest population of any complex in the capital at 9,510 households, sales plunged from 95 in the first five months last year to just 26 the same period this year.
“The economy appears to be in worse shape than during the global financial crisis,” a KREB staffer said. “Most realtors’ earnings are plummeting.”
Interior decorators also suffer from the double whammy of plummeting home sales and surging raw material costs. One owner of a kitchen furniture store in Seongnam, Gyeonggi Province said, “Available projects have dwindled by more than half from a year ago but the costs of raw materials and workers have surged 30 to 40 percent. But if I hike prices I’ll lose even more customers.”
Demand for home appliances also declined. Lotte Himart’s sales in the first quarter dropped 12 percent on-year, and it shifted from a W25.7 billion operating profit to a W8.1 billion loss. “Many of our customers are buying home appliances as they move into new homes, so a virtual absence of home sales has caused sales to decline while our expenses have increased,” a staffer said.
Lee Eun-hyung at the Korea Research Institute for Construction Policy said, “The government should consider stimulating the market by easing taxes and loan restrictions.”
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