"I shouldn’t have bought more back then"... Regret deepens among multi-homeowners

[Financial News]

As the government moves to block maturity extensions on mortgage loans for owners of multiple homes, properties held by landlords whose lease contracts are nearing expiry are starting to come onto the market. Following the end of the temporary suspension of heavy capital gains tax, multi-homeowners are once again under pressure to sell.
On the 2nd, real estate industry officials projected that blocking maturity extensions on mortgage loans for multi-homeowners will push cash-strapped borrowers to list more properties for sale.
Kim Hyosun, chief specialist at the WM Star Advisory Group at KB Kookmin Bank, said, "In a high interest rate environment, there is a high possibility that more properties will be put on the market by owners who cannot afford principal repayments." She added, "In particular, we are likely to see an increase in fire-sale listings timed to the expiry of lease contracts." The government has decided that, starting on the 17th, it will in principle prohibit maturity extensions on mortgage loans for apartments in the Seoul metropolitan area and other regulated zones held by multi-homeowners and registered landlords.
Experts also expect continued price declines, especially in high-priced areas. Nam Hyuk-woo, a real estate researcher at Woori Bank, noted, "As the web of lending regulations has become far tighter than in the past, the burden of raising funds is expected to increase." He projected, "With backdoor loans now blocked, funding will become more difficult in the ultra-high-end segment and in areas centered on Gangnam, Seoul and Seocho District, so a price correction trend is likely to continue for the time being."
Some observers argue that the government’s decision means investors need to rethink their entire approach to real estate.
Kim stated, "It is time to erase the old formula that leverage is always advantageous when investing in real estate." She pointed out, "The government has declared that it will lower the debt-to-Gross Domestic Product (GDP) ratio to 80%, which suggests that borrowing conditions will remain tight for the next several years."
However, some warn that the move could have negative implications for the rental market.
Ham Young-jin, head of the Real Estate Research Lab at the WM Sales Strategy Department at Woori Bank, warned, "This could reduce the supply of apartments available on lump-sum deposit leases and accelerate a shift toward monthly rentals." He added, "Unlike its stabilizing effect on the sales market, the measure could place some strain on the apartment rental market."
ming@fnnews.com Jeon Min-kyung Reporter