"Winter Is Coming" - Is the Housing Market Decline Starting... Market in Turmoil

Capital Region Apartment Price Increase Rate Declines Since Second Week of August
"Winter Is Coming Soon" Concerns Countered as Temporary Phenomenon

[Asia Economy Reporter Kangwook Cho] "Will house prices really fall? The prices that have already risen probably won't drop, right?"

As the rate of increase in house prices in the Seoul metropolitan area slows down, the market is becoming unsettled. In fact, some apartment prices are falling, and uncontracted units are appearing in subscription sales, leading to frequent concerns on online communities that a major downward trend has begun. On the other hand, there are also strong counterarguments that this is a temporary phenomenon caused by the interest rate hike trend and tightened loan regulations, which have dampened buying sentiment.

According to the weekly apartment price trend for the third week of October announced by the Korea Real Estate Board on the 22nd, the apartment sale price index in the metropolitan area this week (as of the 18th) rose by 0.30% compared to the previous week. This is a 0.02 percentage point decrease from the previous week's 0.32% increase.

The apartment price increase rate in the metropolitan area has been declining since the second week of September (0.40%), with 0.36% in the third week of September, 0.34% in the fourth week of September and the first week of October, and 0.32% in the second week of October.

The apartment price increase rate in Seoul remained steady at 0.17% compared to last week, but in Gyeonggi Province it decreased from 0.39% to 0.35%, and in Incheon from 0.42% to 0.40%. In Seoul, the transaction stagnation continued in Mokdong, Yeouido, and Seongsu-dong, which were designated as land transaction permission zones this year, causing the growth rate in the districts including these areas to slow down. However, Gangnam-gu showed strength centered on new apartments in Gaepo and Dogok-dong, and Seocho-gu on popular complexes in Bangbae, Seocho, and Banpo-dong, leading to increased growth rates in the three Gangnam districts: Gangnam-gu (0.23%→0.24%), Seocho-gu (0.21%→0.23%), and Songpa-gu (0.22%→0.25%).

The increase rate of apartment prices in provincial areas decreased from 0.22% last week to 0.20% this week, with Sejong City dropping to 0.02%, continuing a weak trend for 12 consecutive weeks since turning negative at the end of July.

The market views this as a result of weakened buying demand due to the imminent announcement of additional loan regulations by the government, rising loan interest rates at commercial banks, and fatigue from the recent rapid rise in house prices. According to the September real estate market consumer sentiment survey released by the Korea Research Institute for Human Settlements' Real Estate Market Research Center, Seoul's sales market sentiment index recorded 142.8 last month, down 6.1 points from 148.9 the previous month. During the same period, Gyeonggi dropped 5.0 points from 146.8 to 141.8, and Incheon fell 7.5 points from 153.9 to 146.4. As a result, the overall housing sales market sentiment index for the metropolitan area in September was 142.7, down 5.7 points from 148.4 the previous month.

Given this situation, heated debates are ongoing on online communities about whether this marks a turning point in the real estate market. On a community with hundreds of thousands of members, some argue that the downturn has already begun and that it is time to sell, while others insist it is merely a 'breather,' leading to daily sharp confrontations. One member advocating the downturn said, "All indicators point downward for real estate, and winter is about to arrive."

On the other hand, there are strong counterarguments that house prices will rise due to a shortage of housing supply. According to the Korea Housing Industry Research Institute, the housing demand in Seoul is 91,376 units this year, 84,862 units next year, and 85,393 units the year after. In contrast, the planned supply is about 70,000 units annually, approximately 20,000 units less than demand. This imbalance between supply and demand is expected to sustain the price increase trend. Another member countered, "There may be adjustments, but no crash," adding, "Those who only shout about a crash don't even understand these basics and are trying to ruin other people's lives."

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