Supply < Demand... Unstable Housing Price Stability

Metropolitan Area Apartment Sale Prices Rise Slows for 3 Consecutive Weeks
Seoul's 17 Districts Also See Narrowed Increase... Supply Shortage Remains a Concern

[Asia Economy Reporter Kangwook Cho] The upward trend in housing prices in Seoul and the greater metropolitan area is noticeably slowing down. The market appears to be contracting as buyers' financing options are blocked due to the government's stringent loan regulations. However, although the rate of increase has decreased, prices have not stopped rising, and the supply shortage has not been resolved, leading many to argue that it is still too early to predict housing price stabilization.

According to the Korea Real Estate Board on the 29th, the apartment sale prices in the metropolitan area rose by 0.28% during the fourth week of October (as of the 25th), narrowing from the previous week's 0.30%. Apartment sale prices in the metropolitan area had been hitting weekly highs from July to September, reaching up to 0.40% in early September, but since then, the rate of increase has steadily slowed. This month alone, the increase rates have consecutively declined for three weeks: 0.34% → 0.32% → 0.30% → 0.28%.

This week, the apartment sale price change rate in Seoul also narrowed to 0.16% from 0.17% the previous week. Among the 25 autonomous districts, 17 saw a reduction in the rate of increase. The Gangnam 3 districts, which showed strong performance last week, also experienced a decrease in the rate of increase within a week. Gangnam-gu's rate slowed from 0.24% to 0.23%, Seocho-gu from 0.23% to 0.21%, and Songpa-gu from 0.25% to 0.23%.

The government recently assessed that the real estate market is entering a stabilization phase. It explained that the housing price increase is slowing due to a series of measures such as visible housing supply actions, interest rate hikes, and strengthened household loan management, which are dampening investment sentiment in the real estate market. At a press briefing held yesterday, Minister of Land, Infrastructure and Transport Noh Hyung-wook said about the recent real estate market situation, "I think the housing market is at an early stage of entering a stabilization phase."

However, the market points out that it is still too early to talk about housing price stabilization because supply volumes still cannot keep up with demand. Yeokyung Hee, chief researcher at Real Estate R114, said, "Due to loan regulations and interest rate hikes, buyers have become cautious, but transactions are not happening," adding, "A 'holding pattern' continues, especially centered around Seoul."

Although the government emphasizes the effect of pre-sale subscriptions, the fact that supply volumes are inevitably expected to decrease until the year after next is also a source of concern. According to the Korea Institute of Construction Industry, the number of apartment move-ins in the metropolitan area is projected to decrease from 164,000 units this year to 161,000 units in 2022 and 150,000 units in 2023.

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