Skyrocketing property prices in South Korea are leaving ordinary people struggling to find affordable housing, especially in the capital Seoul and surrounding areas.

According to KB Kookmin Bank, the average price of a condominium in Seoul in April rose to some 1.11 billion won ($1 million). A survey by civic group Citizens' Coalition for Economic Justice showed that the price has come close to doubling during the four years since 2017.

High-rise apartment buildings in Seoul are pictured on April 30, 2021. (Kyodo) ==Kyodo

With interest rates reduced as part of measures against the coronavirus pandemic, cheap money has flowed into an already overheated real estate market, and with no end in sight to the run-up in prices, concerns are simmering over the eventual bursting of the bubble.

Homeownership has been a dream for many South Koreans. Lee Hyo Sook, a 40-year-old office worker, purchased a 25-year-old condominium of about 60 square meters for 220 million won in Siheung, Gyeonggi Province, in January.

"The only place we could buy was an old and small one on the periphery of Seoul," lamented Lee, who took the opportunity to begin searching for a home when she married last December.

After failing to find a rental property in Seoul within her budget range, she tried Siheung, a city more than one hour away from the capital on public transport, as the next best option.

Even so, housing prices there were also rising at a precipitous pace. After her purchase, the price of nearby properties rose further.

It even happens that the day before a formal contract is to be signed, the property owner will demand another 10 million won, and tear up the provisional contract if it is refused.

"I was lucky to be able to buy," Lee said, although she ended up with a 140 million won mortgage while her annual salary is just 40 million won. Her husband, who is self-employed, has no fixed income.

In South Korea, a new term called "young-gul" has been coined to describe the position of buyers; it means to "gather up everything you can, even your soul" to make the payment. Lee said she was a perfect example.

According to the Citizens' Coalition for Economic Justice, which analyzed the selling prices of 63,000 condominiums (of about 80 sq meters) in Seoul over the past 18 years, the rate of increase was 82 percent between January 2017, immediately before the inauguration of President Moon Jae In's administration, and December 2020. In comparison, prices rose just 25 percent during the previous administration of Park Geun Hye, who took office in 2013.

The recent surge in prices can be attributed to South Korea's central bank lowering the benchmark interest rate to 0.5 percent in May last year to stimulate the economy amid the pandemic, allowing people to borrow money at rock-bottom rates.

But already for some time in South Korea, where there has been a concentration of the population around the metropolitan area, people have bought into the "real estate myth" that prices will continue to rise, resulting in problems with speculation in the housing market.

There has also been strong criticism of perceived policy failures. The Moon administration has emphasized eradicating speculation and continued to tighten regulations in the housing market, but critics say that while the focus has been on repressing demand, supply needs to be expanded.

The government changed its policy direction earlier this year, announcing a plan to supply a total of 830,000 housing units nationwide, including 320,000 units in Seoul by 2025, but, so far, there has been no noticeable effect in the market.

If interest rates, however, rise in the future and housing supply progresses as planned, there could be a glut in the market in a few years. A sense of caution that the bubble will burst and prices plummet is increasing day by day.