[Report] "Seoul is Different," "Prices Might Stabilize" Housing Price Rise Pauses in Sejong and Daegu... Will It Work in Seoul Too?

Sejong Housing Prices Decline and Unsold Apartments in Daegu... Impact of 'Supply'
Real Estate Agents Divided: "Seoul Demand Overwhelming, Supply Expansion Insufficient" vs "Seoul Also Follows Economic Cycle"
Experts: "Seoul Also Subject to Real Estate Supply Rules... Government Must Properly Assess Public Opinion"

A real estate office located in an alley in Chungmuro, Jung-gu, Seoul.
Photo by Seohyun Kim ssn3592@

[Asia Economy Reporter Kim Seohyun] "Seoul is Seoul. It's a place where demand never stops," "Prices have risen as much as they can. It's time for them to come down."

Last year, the real estate markets in Sejong and Daegu, where apartment prices rose the most nationwide, have entered a turning point. In the second half of this year, apartment prices in Sejong City have recorded a weekly negative growth rate for 16 consecutive weeks.

Daegu also saw apartment price growth limited to about 0.81%, with unsold apartments accumulating. Because of this, although both Sejong and Daegu are large cities with high housing demand, the rapid increase in apartment supply in a short period is interpreted as having stabilized housing prices.

Seoul cityscape. [Image source=Yonhap News]

Given this situation, naturally, attention is focused on whether Seoul can also stabilize housing prices like Sejong and Daegu.

On the afternoon of the 16th, real estate agents met in the Chungmuro area of Jung-gu, Seoul, expressed differing opinions. Real estate agent A, working near an apartment complex close to Seoul Station, predicted, "Demand in Seoul never stops, and prices have risen so much that they are unlikely to fall." He explained, "In provincial areas, prices are cheaper than in Seoul, and sometimes people move down because they cannot afford Seoul's high prices, so it's hard to compare them on the same level."

He added, "Especially in Sejong City, there is a bottom line. It was built for a special purpose, which made it particularly popular last year," and said, "Even now, many people are waiting to buy houses in Seoul, so I expect prices will not fall."

While a decline in housing prices can be hoped for, some believe that the basis for this will not be an expansion of supply. Another real estate agent B near Seoul Station said, "Because people's wealth is insufficient and prices have risen exponentially, prices will eventually fall," but added, "However, whether the law of supply will apply is questionable."

He pointed out, "Even in this area, there are no suitable places for the government to use for supply. I don't think conditions for supply are properly formed." He continued, "As the saying goes, 'Even the king cannot help the poor,' citizens are wary of the public sector, so they won't place much hope on supply."

A paper listing properties for sale is plastered all over the window of a real estate office located near Seoul Station.
Photo by Seohyun Kim ssn3592@

There were also opinions that the law of supply could be applied in Seoul. Real estate agent C, met near Chungmuro, emphasized, "Prices have soared to the max. They have risen so much that they have no choice but to fall." He added, "If supply expands, the downward effect can be enjoyed."

Real estate agent D near Seoul Station also predicted that the principle of supply could apply to Seoul's housing prices based on the declining birth rate. He said, "Because the population is decreasing, housing prices will fall," and emphasized, "The number of births continues to decline. In this situation, if supply increases, Seoul's housing prices will fall just like in other cities." According to Statistics Korea data, the number of births, which was about 406,000 in 2016, has steadily declined to 270,000 last year. There is also analysis that this year it has dropped to about 240,000.

Experts suggest that the law of supply can also be applied to the Seoul area, but the government needs to carefully gauge public sentiment.

Professor Kim Taegi of Dankook University's Department of Economics said, "The principle of supply and demand applies to Seoul as well," and explained, "Seoul is also within an economic cycle. When housing prices fall, the pressure and expectation to buy houses decrease, naturally stabilizing prices."

He added, "However, redevelopment and reconstruction, which can have a real supply effect, are blocked by various regulations," explaining, "The government regulates these under the name of speculation." He pointed out, "Citizens want to buy 'their own homes,' not public rental housing, but the government has failed to grasp what citizens want."

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