The Cold Trading Wave Since 12·16... Buyers Have Disappeared

[Asia Economy Reporter Yuri Kim] The volume of housing transactions in Seoul has sharply declined, causing the market to freeze rapidly. Although there has been an increase in urgent sales in the Gangnam area following the government's December 16 real estate measures, buying demand has weakened due to concerns over further price drops.

According to the Seoul Real Estate Information Plaza on the 31st, the number of apartment transactions in Seoul in January amounted to only 1,439 cases (based on transaction dates). Since the real estate transaction reporting period is 60 days, the transaction volume may increase slightly, but considering the usual practice of brokerage offices reporting immediately after a deal is made, additional reported transactions are expected to be minimal. Judging by the volume reported so far, Seoul apartment transactions have shrunk to levels seen in early 2019 (January to March: 1,454 to 2,275 cases), when the transaction cliff began in earnest after the September 13, 2018 measures.

Seoul apartment transaction volumes gradually recovered from June last year (6,916 cases), surpassing 10,000 cases per month in October and November with 11,515 and 11,479 cases respectively. However, after the December 16 measures were announced in December last year, transactions slowed to 7,532 cases, and the transaction cliff atmosphere has intensified this month.

The market says that after the December 16 measures announcement, buyers waiting to purchase have entered a 'pause' state. Prices had risen so much that buyers felt burdened by chasing purchases, and the government introduced high-intensity measures covering taxation, supply, and finance to curb housing prices in overheated areas like Seoul, opening the possibility of price declines. A representative from A Real Estate Agency in Jamsil-dong, Songpa-gu explained, "Except for some waiting demand who thought they would buy immediately if there was even a slight price adjustment, only occasional inquiry calls are coming."

Homeowners, having learned from previous adjustments followed by price increases, are still not making large-scale price reductions, so transactions are not happening easily. Rather, buyers who have distanced themselves from purchases have turned to jeonse (long-term lease), causing jeonse prices to rise. Most recent transactions are understood to be for properties priced below 900 million KRW. Some properties below 900 million KRW raised their asking prices after the December 16 measures but still managed to be sold.

Seoul apartment prices are also showing a slowdown in their rate of increase. According to the Korea Real Estate Board, the weekly increase rate of Seoul apartment prices has decreased for six consecutive weeks after the December 16 measures, from 0.10% to 0.08%, 0.07%, 0.04%, 0.03%, and 0.02%. Apartment prices in the Gangnam 3 districts (Gangnam, Seocho, and Songpa-gu) turned to decline starting last week, which included the Lunar New Year holiday. The Korea Real Estate Board explained, "High-priced major complexes such as reconstruction projects that led the price rise have declined, and the gap-filling rise in nearby and outer mid- to low-priced complexes has also slowed."

Experts expect this transaction volume freeze to continue for the time being. However, they say it remains to be seen whether the full-fledged spring moving season and the temporary exclusion of multi-homeowners from capital gains tax surcharges will reverse the atmosphere. The sales market, which will reopen next month after completing the transfer of subscription work, is also a variable in transaction volume. Ham Young-jin, head of the Zigbang Big Data Lab, said, "After the December 16 measures, high-priced housing transactions have decreased and the market is in a wait-and-see mode. For the time being, transactions of mid- to low-priced housing will continue amid the transaction lull."

This content was produced with the assistance of AI translation services.