Chaotic Real Estate Market: What Is the Outlook for Housing Prices in the Second Half of the Year?

[Asia Economy Reporter Yoo In-ho] The real estate market is in turmoil. According to major statistics, Seoul apartment prices have entered a stable phase due to the government's multiple real estate regulations.

However, record-high transactions continue to surge, mainly in some Gangnam areas. This trend differs from the statistics indicating price stabilization.

Experts predict that the situation of rising prices amid reduced transaction volumes will continue in the second half of this year. This is because, under multiple regulations, the trend of investing in a single prime property has intensified due to low interest rates and abundant liquidity.

Additionally, multi-homeowners have started to hold out until the first half of next year, and single-homeowners are not in urgent need to sell, which is cited as the background for the continued strong stable trend.

According to the Korea Real Estate Board, Seoul apartment prices have recently shown a downward trend. Since August 24, they have maintained a stable level with a rise rate of around 0.01%. In the four Gangnam districts, Seocho-gu and Songpa-gu have recorded a stable rate (0.00%) for five consecutive weeks, while Gangnam-gu has maintained a stable rise rate of about 0.01% for five consecutive weeks.

In non-Gangnam districts, apartment price increase rates are low at 0.00%, 0.02%, and 0.01%, indicating that overall housing prices have reached a turning point.

As the apartment price rise slows, the transaction cliff has deepened. According to the Seoul Real Estate Information Plaza, the number of apartment transactions in Seoul in August was 3,992, a sharp drop of about 38% compared to 10,647 in July. Compared to 6,606 in August last year, this year's August transaction volume is only about half.

The wait-and-see sentiment has become more pronounced. According to the housing price trend announced by KB Kookmin Bank's Real Estate Live On on the 13th, the Seoul apartment buyer dominance index fell 5.3 points from 101.5 the previous week to 96.2, dropping below the baseline of 100 for the first time in three months.

Doosung Kyu, Senior Research Fellow at the Korea Construction Industry Research Institute, said, "I believe the government's regulations, which have continued since May, have reached an extreme. With tax systems expected to be further strengthened next year and increased capital gains tax burdens, it is difficult to find motivation for transactions in the current market situation," adding, "I expect the wait-and-see trend to continue to the point of boredom."

Some experts expressed the view that the market situation is complex and confusing, so it needs to be observed further. Seo Jin-hyung, President of the Korea Real Estate Society (Professor at Gyeongin Women's University), said, "Statistics show that the number of transactions has halved, creating a distorted phenomenon that the market is stable," and added, "As the government's signal is interpreted as 'neither buy, sell, nor hold real estate,' homeowners are caught in a dilemma, so whether the current stable trend will continue throughout the second half of the year needs to be watched."

Experts expect the current dull wait-and-see trend to change around the first and second quarters of next year. This is because the additional capital gains tax surcharges on multi-homeowners and the increase in comprehensive real estate tax rates are expected to be implemented in June next year, limiting expectations for new listings within this year.

Yang Ji-young, Director of Yang Ji-young R&C Research Institute, said, "As supply plans such as the 3rd New Town become visible and pre-subscription starts next year, the demand waiting for subscription will not turn to sales for the time being, and buyers are also waiting for a correction due to the burden of sharply increased prices," adding, "Ultimately, we need to watch how many properties multi-homeowners will put on the market next spring to avoid capital gains tax surcharges."

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