Decline and Rise: Conflicting Signals ... Real Estate Market in Chaos Ahead of Presidential Election

Transaction Cliff·Inventory Backlog·Seoul Unsold Units
Record High Actual Transaction Prices in Gangnam
Simultaneous Impact of Loan Regulations and Deregulation Expectations
"Clear Trend Flow After the Presidential Election"

Conflicting indicators are simultaneously pouring into the real estate market ahead of the presidential election, creating a chaotic period where it is difficult to predict what lies ahead. In the Seoul apartment subscription market, which had competition rates of thousands to one, unsold units have appeared for the first time in 18 months. On the other hand, some areas continue to see record-high transaction prices. While regulations such as loan restrictions and increased holding and transaction taxes are being strengthened, there is also analysis that measures like the abolition of the '35-floor rule' will deepen market fragmentation and polarization.

◇Certainty: Transaction Cliff and Accumulating Listings= According to the real estate industry on the 4th, as the housing price increase slows down, listings are accumulating in the sales market. The sharp rise in publicly announced prices has significantly increased the holding tax burden on multi-homeowners, and the burden of loan repayments has also grown, leading many to put their properties on the market. According to the real estate information platform Asil, the total number of apartment listings (sales, jeonse, and monthly rent) in Seoul reached 101,855 as of that day, surpassing 100,000 for the first time in 18 months. However, the flood of listings is not translating into transactions. In the fourth week of February, the number of apartment transactions in the metropolitan area was about 1,790, which is only 21% of the average over the past five years.

In Seoul, unsold units, which seemed unlikely to appear again, have emerged. 'Cantavil Suyu Palace,' located in Suyu-dong, Gangbuk-gu, delayed its sale due to the cooling subscription market and even lowered the sale price, but the ultra-small housing types with exclusive areas of 18 to 23 square meters failed to meet the recruitment quota. This is the first unsold unit in Seoul in 18 months. In Incheon, Songdo Central Park Revery, which recorded an average competition rate of 53 to 1 at the time of sale in October last year, is conducting its fifth non-priority subscription on the 8th due to an increase in uncontracted units. Until now, all non-priority subscriptions had met their recruitment quotas, but the fourth non-priority subscription last month saw some unit types undersubscribed, clearly entering a cold spell.

◇Uncertainty: Will Gangnam Hold, Will It Be Settled After the Election?= However, there are also many cases moving in a completely different direction from the sluggish market atmosphere. Despite being designated as a land transaction permission zone in April last year, Apgujeong-dong and Daechi-dong in Gangnam-gu continue to see record-high transactions. According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system, last month, the Hyundai 7th Apartment in Apgujeong-dong (exclusive area 144.2㎡) was traded for 5 billion KRW, setting a new highest transaction price.

According to data from Real Estate R114, while the downward trend is spreading across the metropolitan area, Seoul apartment prices rose by 0.01% in the fourth week of February. This was influenced by rising prices centered on major redevelopment project areas, as expectations for revitalization of reconstruction and redevelopment grew, such as the Jamsil Jugong 5 complex passing reconstruction review. A representative from real estate agency A near Hyundai Apartments in Apgujeong-dong said, "Sellers tend not to lower their asking prices below market value," adding, "There is an expectation that changes will occur after the presidential election, so they are not in a hurry."

Experts view the current market confusion as a result of the complex interplay between strengthened regulations and expectations for easing. Professor Kwon Dae-jung of Myongji University's Department of Real Estate explained, "Unlike Gangbuk, which has many low-priced small and medium-sized apartments, Gangnam's listings are originally priced high, so actual transactions occur among cash-rich buyers," adding, "Loan restrictions do not significantly affect participants in Gangnam apartment transactions, so prices do not fall."

Professor Lim Jae-man of Sejong University's Department of Real Estate said, "If Mayor Oh Se-hoon's real estate policies had not been implemented, a similar nationwide decline would have been observed," and analyzed that there is no need to overinterpret some record-high cases. He said, "To judge (Gangnam's case) as an upward trend, buying demand must follow, but it is difficult to say so based on just one or two transactions."

The point at which the mixed trend in the real estate market will be resolved is also pointed out as 'after the presidential election.' It is expected that until the election, the standoff and polarization between sellers and buyers will continue. Lim Byung-chul, senior researcher at Real Estate R114, said, "Both major candidates from the ruling and opposition parties have commonly pledged to expand supply and ease taxes," adding, "A clear signal to remove uncertainty must come out for a trend to emerge in any direction."

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