At the current moment in time, money is flowing away from South Korea, not into it.
In fact, the outpouring of money away from South Korea has been so dramatic that the property purchases in foreign countries by South Korean residents actually increased by a whopping 57%. In 2006, South Korean individuals spent approximately $750 million in purchases of foreign property whereas last year that number increased to around $1.2 billion. For a country the size of South Korea, those are very significant numbers of funds leaving the country's economy.
While the most popular countries for these purchases were the United States and Canada, Asian countries such as Singapore and Malaysia also experienced a significant inflow of cash into their property markets as a result of the outflow of cash from South Korea.
This news actually represents a victory of sorts for the South Korean government, which has been actively looking for ways to deflate their currency enough to stop the charge it has made against the US greenback in recent months. With a failing US currency (the currency that currently stabilizes most of the world), many in South Korea have been in utter panic regarding the increased value of their currency and that has lead the South Korean government to use capital outflow techniques in order to decrease the value of the South Korean currency.
One of the things they did was to increase foreign property investment to $3 million for the 2007 year, a move that has clearly done exactly what they wanted it to do.
All in all, demand is way down for property in the South Korean housing market, while demand has increased in Singapore and Malaysia by very significant amounts. There is no reason to think that 2008 will be any different in terms of locations chosen by South Korean residents and therefore one can expect property markets in both of those countries to be buoyed continually by investment from South Korean residents.
