Impact of Jeonse Crisis? Transactions in No·Do·Gang Decrease but 'Record Prices Surge'

Seongbuk-gu and Nodobang September Transactions Plummet to One-Fifth of June Level
Still, Half Are Record Highs... "Low Supply and Demand Shift from Jeonse to Sale Support Housing Prices"

[Asia Economy Reporter Onyu Lim] The market situation in the 'Nowon, Dobong, Gangbuk districts (commonly known as No-Do-Gang)', a representative mid-to-low priced apartment cluster area in Seoul, is becoming unusual. While the volume of sales transactions has sharply decreased, record-high price transactions continue to occur. This trend differs from the usual pattern where prices fall as transactions shrink. Experts analyze that the demand shifting from rental to purchase, driven by the shortage of listings and the spread of the jeonse (long-term lease) crisis following the implementation of the two lease laws?the Contract Renewal Request System and the Rent Cap System?is supporting housing prices.

On the 27th, Asia Economy analyzed Seoul apartment sales transactions in June, when 'panic buying' peaked this year, and last month. The number of transactions during this period dropped by 76.4%, from 15,603 to 3,680.

The most prominent decline was seen in Seongbuk, Dobong, and Nowon districts. Seongbuk District's transaction volume fell sharply by 83.8%, from 837 in June to 136 in September. Other areas with over 80% decrease in transaction volume during this period include ▲Dobong District (844 to 139) ▲Nowon District (1,722 to 307) ▲Songpa District (1,162 to 223). Gangbuk District also saw a 79.9% drop, from 372 to 75. Among the top five districts with the highest transaction volume decline rates, four are in the northeastern area?Seongbuk, Nowon, Dobong, and Gangbuk?where mid-to-low priced apartments are concentrated. These areas were also where the 20s and 30s age groups focused their purchases during the panic buying surge in June and July.

The government interprets this decline in transaction volume as a signal of market stabilization. The government believes that since the market has shifted to favor buyers, housing prices will turn downward. However, the market points out that this judgment is premature, as record-high price transactions continue amid the drop in transaction volume.

Analyzing apartment real transactions reported over two days, the 22nd and 23rd, in Seongbuk District and No-Do-Gang, 58 out of 120 transactions?nearly half?were at record-high prices. Particularly in Seongbuk District, which had the highest transaction volume decline rate, more than half of the 23 transactions (12) were record-high. For example, an 84㎡ unit in Isu Brownstone Donam, Donam-dong, Seongbuk, was traded on the 17th for 871 million KRW, 21 million KRW higher than the previous highest price of 850 million KRW in July. The actual transaction price of a 114㎡ unit in Samsung Raemian, Jongam-dong, exceeded 1 billion KRW for the first time on the 26th of last month, rising 50 million KRW from 950 million KRW in July. In Nowon District, transactions exceeding 1 billion KRW are also continuing. A 134㎡ unit in Sungwon Apartment, Junggye-dong, was sold for 1.025 billion KRW on the 26th of last month and then for 1.05 billion KRW on the 5th.

Experts cite the decrease in listings and still-high asking prices as the main reasons for the sharp drop in transaction volume. Kim Hak-ryeol, head of SmartTube Real Estate Research Institute, analyzed, "After the panic buying in June and July, there are few additional listings, so only contracts where buyers accept sellers' high asking prices are made." There is also an analysis that the demand shifting from jeonse to purchase, caused by the jeonse crisis spreading after the implementation of the two lease laws, is supporting the sales market in this area. Kim said, "Both No-Do-Gang and Seongbuk District have many transactions for actual residence," adding, "Tenants who must move out according to contract periods have no choice but to conclude sales even at high prices."

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