"Gannam's Uptrend Pauses vs. Limited House Price Decline"… Government and Market at Cross Purposes

Slowing Rise in Seoul Apartment Prices in Real Estate Statistics
Government Expects Stability as Multi-Homeowners Increase Listings
However, Prices Continue to Rise in Seoul Outskirts... Jeonse Prices Also Up
Possibility of Slight Drops Despite Overall Price Tug-of-War

A real estate agency in Gangseo-gu, Seoul. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Moon Jiwon] Both government and private statistics show that the rate of increase in Seoul apartment prices has narrowed this week. In particular, the upward trend in apartment prices in the Gangnam area has virtually come to a halt. Based on this, the government expects that the number of listings from multi-homeowners will increase soon, leading the market to regain stability. However, experts explain that the price decline due to the increase in listings will be limited.

According to the Korea Real Estate Board on the 23rd, Seoul apartment prices rose by 0.02% this week, narrowing the increase compared to the previous week (0.04%). In the private statistics from KB Kookmin Bank, Seoul apartment prices also showed a slight decrease in the rate of increase from '0.53% to 0.44%'. The KB Buyer Dominance Index fell for six consecutive weeks, recording 114.3, the lowest since June 15. Although the index remains above 100, indicating that demand still exceeds supply, the gap appears to be gradually narrowing.

The Upward Trend in Apartment Prices in the Four Gangnam Districts Has Virtually Stopped... Effect of Measures?

According to Korea Real Estate Board statistics, the rate of increase in the four Gangnam districts (Gangnam, Seocho, Songpa, and Gangdong) has remained between 0% and 0.02% over the past four weeks, showing signs of stagnation. The government significantly increased the comprehensive real estate tax burden on owners of high-priced homes and designated Samsung, Cheongdam, and Daechi neighborhoods in Gangnam-gu and Jamsil neighborhood in Songpa-gu as land transaction permission zones, which is interpreted as causing buyers to adopt a wait-and-see stance.

Kwon Il, head of the research team at Real Estate Info, said, "In the past, if jeonse prices rose sharply like now, gap investments involving jeonse deposits would have been rampant, but such activity is not seen currently," adding, "In the first half of the year, non-homeowners, unsettled by the rapid rise in jeonse prices, continued chasing purchases, but in the second half, it will be difficult for transaction volumes to increase significantly."

The government introduced measures to prevent 'gap investments' through the June 17 measures, such as immediately recalling jeonse loan funds when purchasing homes over 300 million KRW in regulated areas, and announced in the August 4 measures a significant increase in special supply for people in their 30s, which has somewhat slowed the rise in apartment prices. Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, recently explained in the National Assembly that major measures take effect after eight weeks and that housing prices will stabilize soon.

Experts Say "Price Decline Will Be Limited"... Actual Prices Jump in Seoul Outskirts

However, experts predict that Seoul apartment prices are unlikely to enter a full downward trend. For prices to fall, many listings with reduced prices must appear across Seoul, but such an atmosphere is difficult to form at present.

In mid-to-low-priced complexes in the outskirts of Seoul such as Nowon, Dobong, and Geumcheon districts, prices are showing a firm upward trend as owner-occupied listings are traded, and it is analyzed that multi-homeowners in the Gangnam area are likely to hold on for the time being.

In fact, in areas with dense mid-to-low-priced apartment complexes such as Nowon, Dobong, and Gangbuk districts (known as No, Do, Gang), prices continue to rise as listings are withheld due to expectations of further price increases. For example, a 79.07㎡ (exclusive area) unit in Sangyeju-gong 7 complex in Sangye-dong, Nowon-gu, was traded at 900 million KRW (4th floor) on the 31st of last month, 20 million KRW higher than the highest price of 880 million KRW (9th floor) recorded in February.

Ahn Myung-sook, head of the Real Estate Advisory Center at Woori Bank, said, "If the atmosphere spreads that prices can no longer rise, urgent sale listings will appear, but since there is still a belief that prices can go up, homeowners are likely to wait and see," adding, "Because there will not be many urgent listings within this year, it will be difficult for prices to go into negative territory."

For non-homeowners, it is advised that 'tax-saving listings' released by multi-homeowners ahead of the property tax imposition date in June next year or listings sold cheaply by corporations struggling due to this year's strengthened regulations could present opportunities. Team leader Kwon said, "Even if Seoul housing prices go through a correction period, it is highly likely that after a brief drop like in the first half, prices will rise again," adding, "If properties priced below market value appear, it is worth considering acquiring them."

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