[Gold Age 21] "Second Half Real Estate Sales and Jeonse Prices Inevitably Rise"

Senior Expert Hapsu Park of KB Kookmin Bank's 'Current Status and Prospects of the Real Estate Market in Times of Turmoil'

Hapsu Park, Senior Real Estate Specialist, KB Kookmin Bank WM Star Advisory Group

[Asia Economy Reporter Park Sun-mi]"The real estate market in the second half of this year is expected to rise in both sales and jeonse (long-term lease). Income-generating real estate is also likely to maintain a slight upward trend due to the continuous entry of buyers."

Park Hap-su, Senior Real Estate Specialist of KB Kookmin Bank WM Star Advisory Group, made these remarks on the 8th at the '2021 Gold Age Forum: Smart Retirement Planning for Silver Investors' hosted by Asia Economy at the Bankers Hall in Jung-gu, Seoul, under the theme 'Current Status and Outlook of the Real Estate Market in a Period of Turbulence.'

Park said, "Housing prices in Seoul are currently on an upward trajectory," adding, "Although the population of Seoul is decreasing, the number of households is increasing, and there is high demand for new apartments, but supply is not keeping up, so prices are likely to continue rising." He advised, "Expanding supply is the answer, but it is physically impossible in the short term. Policy changes are needed to prevent listings from being withheld."

He continued, "Regarding the sales market, the metropolitan area (Seoul, Incheon, Gyeonggi) is generally maintaining an upward trend, and the five major metropolitan cities?Busan, Daegu, Daejeon, Ulsan, and Gwangju?are also likely to see price increases," noting, "Although there will be regional differences, an overall upward trend is expected in the second half."

Regarding the pre-sale market, he anticipated strengthened market concentration due to a decrease in apartment move-in volumes and a sharp drop in unsold homes. He forecast that the subscription fever will continue both in the metropolitan area and provinces. The jeonse market is also expected to rise overall. He explained, "The metropolitan area is structurally bound to rise due to supply shortages, the impact of the two lease laws, and increased demand for jeonse stability."

On the income-generating real estate market, he recalled that prices of commercial buildings in Seoul have risen 20-30% since the beginning of the year, stating, "Buyers are still overflowing," and "There are almost no good properties available, and sellers are in no hurry." He diagnosed, "Due to COVID-19, the lease market has not yet recovered, and yields have been adjusted downward to the 2% range, but buyers rely on investment gains such as price increases, and with continued low interest rates and accelerated liquidity inflows such as land compensation funds, sales prices are supported," adding, "Overall, market concentration in sales is likely to be maintained until next year."

He advised, "The commercial building market is also continuing its upward trend due to the continuous entry of buyers, with prices likely to maintain a slight upward trend. Buyers need to focus more on purchasing in areas of interest rather than just observing."

Meanwhile, Park identified the following factors as price-increasing variables in the future real estate market: ▲ supply shortage ▲ liquidity effect (purchasing power) ▲ maintenance of low interest rate policy; and as price-decreasing factors: ▲ real estate policy stance ▲ loan regulations ▲ rise in loan interest rates, but added, "At this point, prices are highly likely to trend upward."

Trends in Apartment Move-in Volume in the Seoul Metropolitan Area (As of June 11)

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