[Inside Chodong] Stop the Cruel Tease of False Hope in Real Estate

"Gangbuk is falling, but Gangnam keeps rising. Is it really true that house prices are dropping?"

Many people cast doubtful eyes on the government's claim that house prices are stabilizing downward. According to figures compiled by official government agencies, the rate of increase in house prices is indeed slowing. Last week, the rise in apartment prices in Seoul hit its lowest point in nine months. In fact, apartment prices in Eunpyeong-gu, Seoul, ended their upward trend after 1 year and 9 months and shifted to a downward trend. Yeongtong-gu in Suwon also showed a decline, being the only district in Gyeonggi Province to switch to a downward trend.

However, the situation in the ultra-high-end housing market, where prices reach tens or hundreds of billions of won, was completely different. On the 13th, a 268.95㎡ unit in Park Hannam, Hannam-dong, Yongsan-gu, Seoul, was sold for 12 billion won. This was the second-highest apartment transaction price in South Korea's history. Earlier last month, a 489㎡ (68th floor) officetel unit in Lotte World Tower and Lotte World Mall (Signiel Residence) in Sincheon-dong, Songpa-gu, Seoul, was sold for 24.5 billion won. The situation in Gangnam is similar. This month alone, a 160.28㎡ unit in Hyundai 2nd Complex, Apgujeong-dong, was traded at 6.02 billion won, 220 million won higher than the previous transaction, and Gaepo Woosung 2nd Complex and Raemian Daechi Palace in Daechi-dong were sold for 4.2 billion won higher at 4.2 billion won and 2 billion won higher at 4.05 billion won, respectively. The polarization is intensifying.

In the jeonse market, since the beginning of this month, the supply of jeonse tenants seeking apartments in Seoul has exceeded the demand for jeonse apartments. Especially in areas where jeonse prices have recently surged, demand is decreasing relative to supply. The Seoul apartment jeonse market has shifted to a 'buyer’s market' for the first time in about 2 years and 2 months. The government evaluates this as a sign that the jeonse market is entering a stable phase. Based on key indicators, it seems that jeonse prices could soon fall and the market stabilize.

However, voices from the market emphasize that the jeonse hardship on the ground continues. Since the implementation of the Lease Protection Act last year, the frequent use of the right to renew contracts has reduced new jeonse contracts, and combined with jeonse loan regulations and interest rate hikes, moving demand has sharply decreased, shrinking the jeonse market. In reality, not only sales but jeonse transactions themselves have sharply declined, leading to a widespread 'transaction cliff' phenomenon. Some interpret this as housing demanders turning cautious due to government regulations. There are even criticisms that demanders are being pushed from jeonse to the monthly rent market. It is also predicted that the comprehensive real estate tax bomb will accelerate the shift from jeonse to monthly rent. In August next year, marking two years since the Lease Protection Act was enforced, contracts for households that renewed last year will expire. The supply of new apartments in Seoul will also be lower than this year. With next year’s official property prices rising sharply, the burden of holding taxes is expected to reach an all-time high.

The president, who vowed to curb house prices, has apologized several times. The recently announced economic policy direction report for next year omits any evaluation of the current real estate policy achievements. At best, the government improved systems so that young people can live in quality jeonse rental housing and supported 200,000 won interest-free monthly rent loans. Despite this, the government keeps repeating rosy forecasts of market stabilization. However, it is obvious that the situation will change after next year’s presidential election. "If I keep applying for housing subscriptions and work hard, someday I’ll be able to win a new apartment in a major area of Seoul and live there." This modest hope has long faded as a cruel tease from the dozens of policies the government has introduced.

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