"From Apartments to Villas"... Ongoing Real Estate 'Panic Buying'

Average Seoul Apartment Transactions in June-July Reach Around 12,000
July Seoul Multi-family and Row House Transactions Around 7,000... Highest in 12 Years
Fear-driven Buying: "If You Don't Buy Now, You'll Be Homeless for Life"

View of the apartment complexes along the Gangnam Han River from the 63 Observatory in Yeouido, Seoul. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Onyu Lim] Amid fears of a sharp rise in housing prices, apartment hoarding has surged, pushing the average number of apartment transactions in Seoul in June and July beyond 12,000. Despite over 20 government measures, it is analyzed that young people, anxious about soaring sale and jeonse prices, rushed to purchase homes. As hoarding spreads beyond apartments to villas, instability in the real estate market is intensifying.

Seoul Apartment Transactions Rise from 4,000 Range in April-May to 12,000 Range in June-July

According to the Seoul Real Estate Information Plaza on the 16th, apartment sales transactions in Seoul were 15,595 in June and 9,524 in July. Considering that transactions were 3,027 and 5,535 in April and May respectively, this is a sharp increase. The two-month average for June and July is 12,560, surpassing the highest figure last year of 11,570 in October.

In the market, a monthly transaction volume of 10,000 is interpreted as an indication of excessive buying pressure. In fact, since the survey of Seoul apartment sales began in 2006, monthly transactions exceeding 10,000 have occurred only 26 times, mostly coinciding with periods of rapid price increases. For example, the record high of 19,803 transactions in October 2006 occurred during the Roh Moo-hyun administration, a time of soaring housing prices.

Experts view this surge in transaction volume as a sign that the government's housing price stabilization measures have lost market trust. Despite the June 17 real estate measures, housing prices have risen sharply, and even jeonse prices have increased, prompting anxious young buyers to engage in panic buying. A representative from real estate agency A in Junggye-dong, Nowon-gu said, "Many recent buyers are young people such as newlyweds," adding, "With prices rising overnight, there is a widespread feeling that 'if not now, I may never be able to buy a home.'"

Hoarding Triggered by Apartments Spreads to Neglected Villas... "Be Cautious Due to Low Liquidity"

The panic buying triggered by soaring apartment prices has spread to the market for multi-family and row houses (villas). Last month, sales transactions of multi-family and row houses in Seoul reached 7,005, the highest in 12 years since April 2008 (7,686 transactions). Considering that transactions for these housing types ranged between 3,000 and 4,000 from January to May this year, this is a rapid increase.

The increase in transactions of multi-family and row houses, which had been neglected compared to apartments, is interpreted as a balloon effect caused by rising apartment prices and strengthened government regulations. Young people who failed to enter the apartment market are turning to relatively affordable housing as a last resort. A man in his 30s, Mr. B, who recently signed a contract for a villa in Mangwon-dong, Mapo-gu, Seoul, said, "For people in their 30s, buying an apartment in Seoul is only possible if they have inherited wealth or work for a large corporation," adding, "I chose a villa for stable actual residence."

As demand increases, there is also a sense of gap investment aimed at capital gains. This is because regulations are relatively weaker compared to apartments. According to the June 17 measures, if one purchases an apartment worth over 300 million won in speculative or overheated speculation areas, they cannot receive jeonse loan financing. However, such regulations do not apply to multi-family or row houses.

However, experts advise caution when investing in multi-family and row houses. An industry insider said, "Compared to apartments, villas have limited potential for value appreciation," adding, "During market downturns, the villa market, which has lower liquidity, may suffer greater damage."

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