“Real estate transactions are down, and other related businesses are feeling the strain. Last year we were at our usual peak in business. This year, business has slipped drastically.”
These are the words of Mr. Kim, who works for a Korean moving company. Mr. Kim was complaining about business and has every reason to complain; he has had a very difficult year. He blames the scarcity of clients on the continuing downward trend of real estate sales, as well as the fact that more people are choosing not to move, but to stay where they are, in the face of rent increases. Both of these factors are bad for business.
This year the Korean real estate market has sunk even deeper into an economic depression, and this downward slide is slowly taking more and more related businesses with it. While Korean real estate brokers are on the front line, and therefore the first to feel the serious, and often damaging, effects of the real estate slump, increasingly, other related branches, such as moving companies, electronics, and home appliance companies are also feeling the pinch. Normally, such companies should be enjoying their busiest season, with contracts continually coming in as clients move and remodel.
According to one member of a Korean moving company, “Summer, and especially the peak vacation months of July and August, is normally our busiest time. This period has long been referred to a ‘moving season.’ This year though, because of the depressed real estate market, the so-called ‘moving season’ has dried up significantly. There are far fewer customers than ever before, and without customers, there is no season.”
Industry analysts estimate that since house and home sales have continued along a predicted decline in the past months, moving companies are facing anywhere between a 30 percent to 50 percent decrease in clients, compared with the same period last year.
“The moving business has been very good until recently. We had business all through the months, with both home-owners and renters. But this year with the real estate market so depressed, we are nowhere near where we should be in terms of customers – even in our peak season. I think we are about 30 percent below last year’s numbers,” said an employee of a Korean moving company. He added, “In the case of renters, we have always had a brisk business, especially towards the end or beginning of a month. But now, with rents soaring, fewer people are changing residences. Our business is dropping fast. Add to this our ever-increasing company costs – for instance, gas and insurance prices. We have the potential for a disaster. It’s becoming very difficult for businesses related to real estate.”
Like Korean moving companies, Korean electric and home appliances companies are also being hit by the real estate slump. With home purchases dropping, new appliance purchases are slipping too. Sales of air conditioners, washing machines, refrigerators, stoves and lighting have also slumped beyond expectation this year. A member of a Korean home appliances company noted: “When house purchases or rentals are high, we see a strong demand for our appliances and service. This year, with sales and rentals at a new low, we have yet to meet our expected sales. What we are seeing is the direct aftermath of the real estate depression – and it’s not over yet.”
Industry experts explain: “The house market is really very closely connected with various other businesses. Therefore, the decline of house sales can trigger economic depression in other businesses. Until house sales and the market in general, have recovered, these related businesses will not be able to avoid this trickle-down effect that real estate is having on them.”
