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Stagnant South Korea Property Drags On Growth Rebound

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South Korea’s worst property-market slowdown since 2004 threatens to limit the economy’s rebound, as the government’s stop-go policies to stimulate the housing market fail to secure any sustained revival.

Apartment transactions in Seoul plunged 80 percent in July from June, when temporary acquisition tax cuts expired, according to data on the city’s website. National home prices were flat or fell for 14 straight months through July, according to Kookmin Bank, the nation’s largest mortgage lender.

Injecting life into the real-estate market was a key goal for President Park Geun Hye when she took office in February, rolling out on April 1 tax breaks to spur demand and supply-control measures to support prices. Now, a construction downturn is adding to the risk of the nation missing the government’s 2.7 percent growth forecast for this year amid patchy demand for exports and near-record household debt.

“South Korea’s property market is sinking slowly, sapping the growth potential of the economy,” said Oh Suk Tae, a Seoul-based economist at SG Securities. “Given the large share of household wealth in real estate and the heavy reliance on mortgages, consumers will continue to scrimp on spending unless property prices make a sustained upswing.

If anyone is still in doubt about the driving force behind the global economy its clever financial innovation revolving around fecking housing. It's the easy road to wealth and you don't have to do anything apart from take on a large mortgage to keep the ponzi growing.

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