Gangnam 3 Districts See Two Consecutive Weeks of Decline in Private Estimates... Variables Are 'Corona, Loans, and Officially Announced Prices'

[Asia Economy Reporter Yuri Kim] Apartment prices in the 'Gangnam 3 districts'?Gangnam, Seocho, and Songpa districts in Seoul?are seeing an increased rate of decline in private sector surveys following the Korea Real Estate Board's data. Experts cite the novel coronavirus infection (COVID-19), loan restrictions, and the impact of the official property price realization as variables to gauge the future downward trend in these areas.

According to Real Estate 114 on the 23rd, apartment prices in Gangnam, Seocho, and Songpa districts fell by 0.01%, 0.03%, and 0.08%, respectively, compared to the previous week in the third week of March. This marks the second consecutive week of decline following a simultaneous downturn after about a year last week. Seocho and Songpa saw their decline rates increase by 0.01 percentage points and 0.07 percentage points, respectively, compared to the previous week. This is a combined effect of the government's December 16 measures last year, which dampened sales sentiment for ultra-high-priced homes, concerns over economic recession triggered by COVID-19, and the recent announcement of apartment official prices. Some complexes in Banpo and Jamsil have even been traded at prices adjusted down by 10-20% compared to last month.

Experts diagnose that the shift to a decline in apartment prices in the Gangnam 3 districts, which had led the rapid rise in Seoul housing prices, carries symbolic significance. If the Gangnam 3 districts' housing prices turn to a downward trend, the non-Gangnam areas and metropolitan area hot spots currently experiencing a rising trend due to the balloon effect will inevitably be affected.

Experts point to the COVID-19 pandemic as the biggest variable. They explain that if the global health crisis triggered by COVID-19 fully translates into economic risks, it will inevitably be a negative factor for real estate, one of the asset products. Ham Young-jin, head of the Zigbang Big Data Lab, said, "The downward risks in the macroeconomy, concerns over volatility in financial markets, and infection fears that increase the possibility of economic contraction and cooling of the real estate market are the key causes of cautious demand and psychological contraction in real estate." He added, "The COVID-19 issue, which has frozen production, investment, and consumption, will be the biggest variable depending on when it calms down."

In this situation, the December 16 measures announced last year and the tax strengthening due to the realization of official property prices are also expected to directly affect real estate prices in the Gangnam area. The loan regulations, including the complete ban on mortgage loans for apartments exceeding 1.5 billion KRW under the December 16 measures, and the increased tax burden due to the rise in official property prices are acting simultaneously, which could lead to price declines. The fatigue from the steep price surge so far is also expected to be a factor that accelerates the decline.

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