Changing the Statistical Sample... Surprising Rise in Officetels

Increase in Demand and Sample Expansion After Introduction of Jeonwolje Rent Cap System
After Nearly 2 Years of Decline, Sale and Jeonse Prices Turn Upward

[Asia Economy Reporter Choi Dong-hyun] After nearly two years of decline, the nationwide officetel sale and jeonse prices unexpectedly turned upward last month. This is analyzed to be due to increased demand for officetels following the introduction of the rent ceiling system and the right to request contract renewal, combined with the expansion of the statistical sample.

According to the Korea Real Estate Board on the 7th, the nationwide officetel sale price index rose by 0.02% last month. This marks the first increase in 22 months since October 2018. Unlike the six major metropolitan cities including Busan, which all showed negative growth rates, Sejong surged by 0.55%, pulling up the overall average price. The officetel jeonse price index also rose by 0.11%, reaching its highest level since March 2018.

This price increase is primarily attributed to the Real Estate Board expanding the sample size for investigating officetel price fluctuations from 1,500 units to 2,000 units in July. In particular, the Board not only increased the sample size but also completely revamped the sample, including a large number of newly built officetels.

Officetel price statistics have been published since January 2018 after a pilot survey in 2016, but the existing sample only included officetels built up to the end of 2015. In contrast, the revamped sample reflects officetels newly built as recently as September last year. Since newer officetels tend to have abundant demand and stronger prices, this factor likely influenced the price increase in August. In fact, the median sale price of Seoul officetels calculated with the existing sample in June was 207.12 million KRW, but the median price measured with the new sample in July rose by 13.5% to 235.22 million KRW.

Along with this, the Real Estate Board subdivided the area classification, which was previously divided only into under 40㎡ and over 40㎡, into four categories. A Board official explained, "Unlike apartments, officetels have a short construction period, so price changes of newly built officetels were often not timely reflected in the statistics. This time, a large-scale revamp was conducted," adding, "Due to this influence, an unusual upward trend appeared in some regions last month."

However, to prevent a break in the time series between the old and new samples, the Board applied a correction value to the June index, which became the new baseline (100).

Some view the balloon effect caused by housing market regulations as another reason for the rise in officetel prices. Cho Hyun-taek, a researcher at the Commercial Information Research Institute, said, "Officetels are subject to almost no regulations regarding loans, taxes, and subscription compared to apartments, so recent demand has increased," and predicted, "Although there will be regional temperature differences, price increases and transaction volume growth will continue for the time being."

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