Listings Pile Up as Record Highs Surge... Chaotic Real Estate Market

Seoul Sales Supply-Demand Index at 105.6 in Third Week of March, Falling for 5 Consecutive Weeks
However, Over Half of 180 Registered Sales Transactions on 18th Hit Record Highs
Signs of Transaction Freeze and Decline, but Housing Prices Remain Unmoved

An urban apartment is visible from the Korea International Trade Association in Gangnam-gu, Seoul.
[Image source=Yonhap News]

[Asia Economy reporters Onyu Lim and Mune Won] # Newlywed couple A, who had endured last year's panic buying, finally purchased an apartment worth around 700 million won in Mia-dong, Gangbuk-gu, Seoul recently. Despite news of accumulating listings, they tried to negotiate a 10 million won discount with the seller but ended up signing the contract at the asking price. A said, "I didn't want to buy at a record high price, but since government supply seemed likely to be delayed and I could see more buyers entering the real estate market, I decided to secure my home with a 'Yeongkkeul' (borrowing to the max) loan."

Since the 2·4 real estate measures, a deepened wait-and-see attitude has led to an accumulation of apartment listings in Seoul, but a confusing atmosphere continues with record-high prices emerging one after another. While there are expectations that tax-saving listings from multi-homeowners will stabilize the market, concerns have been raised about supply disruptions due to speculation allegations involving employees of the Korea Land and Housing Corporation (LH), raising fears that last year's panic buying could reignite.

According to the weekly apartment trend report by the Korea Real Estate Board on the 19th, Seoul's sales supply-demand index for the third week of March was 105.6, marking five consecutive weeks of decline since the second week of February (111.9). This index quantifies the balance between supply and demand, where values closer to '0' indicate supply exceeds demand, and values closer to '200' indicate demand exceeds supply. Following the 2·4 measures, rising expectations for increased supply shifted the sentiment from 'buy before it's too late' to a wait-and-see stance, causing transactions to stagnate and listings to accumulate. According to real transaction data from the real estate big data company Apartment Real Transactions, current apartment listings for sale in Seoul stand at 45,991, a 14.5% increase from 40,135 a month ago.

Typically, an accumulation of listings is interpreted as a sign of falling house prices. However, Seoul's housing prices remain unshaken. Although the rate of price increase has slowed, record-high transactions continue to occur in various areas. Asia Economy's analysis shows that out of 181 apartment sales registered in Seoul on the 18th, 92 recorded new highs. Record prices were not only seen in Gangnam-gu, where high-end apartments are concentrated (6 out of 8 transactions), but also in areas with many mid-to-low priced apartments such as Nowon-gu (10 out of 16), Dobong-gu (4 out of 7), and Dongdaemun-gu (4 out of 6). In Seongdong-gu, all 4 transactions were at record highs.

In this unusual market where listings accumulate alongside record-high prices, there is hope that an increase in tax-saving listings from multi-homeowners in the first half of the year, driven by a sharp rise in official property prices, could stabilize housing prices. This is because completing ownership transfers before June 1, when property and comprehensive real estate taxes are levied, can reduce tax burdens. However, recent LH speculation allegations have put the 3rd new town projects and the public-led supply core to the 2·4 measures at risk of collapse, raising concerns that housing prices could instead be stimulated. This is because many waiting buyers for subscription could turn into active buyers in the sales market.

Senior Research Fellow Doosung Kyu of the Korea Construction Industry Research Institute said, "Decisions by multi-homeowners to sell or hold were largely made by the end of last year," adding, "If they chose to hold, the increased tax burden from rising official property prices is likely to be passed on to economically vulnerable tenants." He continued, "The LH scandal is shaking the foundation of the government's public-led supply policy," and added, "Although multi-homeowners face heavy tax burdens, if they endure, they are likely to expect housing prices to rise due to supply shortages."

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