Steeper Transaction Cliff... Seoul Apartment Sales in August Plummet by Half

Trading Volume Limited to 2,351 Transactions... Sellers and Buyers Engage in a Standoff
Contract Cancellations by Homeowners Also Continue

[Image source=Yonhap News]

[Asia Economy Reporter Jo Gang-wook] "Due to loan regulations, genuine buyers are stuck, and with house prices continuing to rise, homeowners are reluctant to sell easily. Some sellers even cancel contracts, expecting prices to go up further." (Representative of A Real Estate Agency in Junggye-dong, Seoul)

As apartment prices soar to unprecedented levels, the number of listings has sharply decreased, intensifying the transaction freeze phenomenon. The number of apartment sales in Seoul last month barely exceeded 2,300, which is only half compared to the previous month.

According to the Seoul Real Estate Information Plaza on the 6th, the reported apartment transaction volume in Seoul last month was 2,351 cases. Compared to 4,692 cases in the previous month, this is about half. Since the housing transaction reporting deadline is within 30 days after the contract, there is still time to report, but if this trend continues, it is highly likely that the volume will not even reach the 3,666 cases recorded in April, which was the lowest this year.

Although transactions have sharply contracted, prices continue to rise steeply. Seoul apartment prices have recorded a 0.2% increase for five consecutive weeks recently, the highest rate in three and a half years since February 2018. The trend is driven by ultra-high-end complexes in the Gangnam area leading the rise, with mid-to-low-priced apartments in the outskirts following.

In particular, in major school district-preferred areas such as Mok-dong in Yangcheon-gu, Junggye-dong in Nowon-gu, and Daechi-dong in Gangnam-gu, apartment sales transactions have almost disappeared. According to KB Live Real Estate, in Cheonggu 3rd Complex, known as the flagship apartment in Junggye-dong with 780 households, an 84.77㎡ (exclusive area) unit was traded for 1.383 billion KRW in early last month, but there have been no transactions since. Nearby apartments such as Life, Cheonggu, and Shindong-a, totaling 960 households, recorded only four sales. The apartment transaction volume in Nowon-gu shrank from 466 cases in July to 166 cases in August, about one-third. According to the Korea Real Estate Board, Seoul recorded the highest price increase rate for 22 consecutive weeks as of the fifth week of August (30th).

Yangcheon-gu shows a similar pattern. In the New Town 5th Complex, only one sale was recorded among 1,848 households, and in the nearby 6th Complex, only three sales among 1,369 households.

Some frontline real estate agents report that there are increasing cases where homeowners cancel sales contracts. Due to house prices rising by tens of millions to hundreds of millions of KRW within just one or two months after the contract and before the final payment, some homeowners judge that it is more profitable to cancel the contract unilaterally and pay double the deposit rather than sell.

A representative from B Real Estate in Mok-dong said, "Even after signing a contract, as prices keep rising, homeowners feel they sold at a loss and break the contract. Some buyers put down a preliminary deposit if they like a listing, but transactions involving only the preliminary deposit are often canceled."

According to Asil, a real estate big data company, as of this day, the number of apartment listings in Seoul is 39,041, remaining below 40,000 for a month since early August. The number of apartment listings in Seoul has fallen below 40,000 for the first time in six months since February.

Yeokyunghee, senior researcher at Real Estate 114, said, "There are not many available listings for transactions for the time being, and in complexes with redevelopment or other development prospects, sellers' asking prices are rising," adding, "As the transaction volume decreases amid a standoff between sellers and buyers, the upward trend in house prices is expected to continue."

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