Moving Season, but Seoul Apartment Transactions Plummet

Only 2,082 Apartment Sales in Seoul Last Month... An Unending Transaction Cliff

[Asia Economy Reporter Donghyun Choi] The Seoul apartment sales market is experiencing a deepening transaction freeze due to the government's comprehensive strengthening of real estate regulations. As the cautious stance between sellers and buyers continues, the number of frontline real estate agencies closing their doors is also increasing.

According to the Seoul Real Estate Information Plaza on the 7th, the number of apartment sales transactions in Seoul last month was recorded at 2,082 as of the previous day. This is the lowest level this year, amounting to only 28% of the average monthly transaction volume of 7,366 from January to August. Although the reporting deadline for actual transactions is 30 days, frontline real estate agencies expect that the final transaction volume will not increase significantly this month, considering the many holidays including the Chuseok holiday.

Last month's transactions show a clear decline even compared to historical September transaction volumes. Over the past 10 years from 2010 to last year, the average number of apartment sales transactions in Seoul in September was 6,973. Except for 2010 (2,811 transactions) and 2012 (3,388 transactions), the transaction volume generally ranged between 7,000 and 10,000.

Looking at the actual transaction status of contracts made last month, some major reconstruction complexes in the Gangnam area had no sales reports for the entire month. In Daechi-dong, Gangnam-gu, Eunma Apartment has yet to report a single actual transaction for September. In Jamsil-dong, Songpa-gu, despite being a large complex with a total of 3,930 households, the only transaction last month was for an 82.61㎡ (exclusive area) unit sold at 2.321 billion KRW. This price is about 100 million KRW lower than the previous transaction in July, which was 2.42 billion KRW. These areas are designated as land transaction permission zones, and with apartment prices in Seocho and Songpa districts remaining flat for eight consecutive weeks, buyer sentiment in Gangnam has weakened, effectively freezing the transaction market. A representative from a licensed real estate agency in Jamsil-dong said, "After one or two quick sales, sellers withdrew their listings, refusing to sell at those prices," adding, "Buyer inquiries are scarce, making the autumn moving season seem dull."

As the transaction freeze deepens, a cautious atmosphere continues between sellers and buyers. Sellers either do not put properties on the market or insist on their desired prices, while buyers expect price drops, making transactions difficult to conclude.

However, recent market conditions show buyers holding a slight advantage. The buyer dominance index compiled by KB Kookmin Bank fell below 100 in the second week of September and has currently dropped to 85.2. A buyer dominance index below 100 indicates that there are more sellers than buyers.

With transactions sharply contracting, the number of real estate agencies closing is also rising. According to Statistics Korea, the real estate industry production index in August fell by 6.7% compared to the previous month. This is the largest drop in 7 years and 1 month since July 2013 (-8.1%). The real estate industry production index reflects the sales level of real estate businesses, including brokerage commissions. In the same month, the number of closed or suspended licensed agencies in Seoul was 182, marking a three-month consecutive increase. In fact, even after the Chuseok holiday ended, many real estate agencies around apartment complexes in Seocho-gu and Gangnam-gu remain closed and are easily observed.

Experts predict that the transaction freeze will intensify for the time being due to apartment market regulations and the prolonged impact of the novel coronavirus disease (COVID-19). Jang Jaehyun, head of Real Today, said, "The transaction freeze was a predictable trend following consecutive loan and tax regulations such as the June 17 and July 10 real estate measures," adding, "However, since demand for purchasing homes in Seoul remains high, a sharp decline in prices is unlikely."

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