'House Prices': Government Says 'Decline' but Market Says 'Rise'?

Apgujeong Hyundai Apartment_Real Estate Reference Photo / Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Kangwook Cho] "The government says prices have fallen, but the market says they have risen, so I don't know what to believe."

The differing diagnoses from data collection agencies regarding weekly real estate statistics showing housing price trends are increasing confusion among homebuyers. The public research agency Korea Real Estate Board reported that apartment prices in Seoul have fallen for six consecutive weeks, while private research agencies KB Real Estate and Real Estate R114 reported slight increases, presenting conflicting results.

According to Real Estate R114 on the 7th, apartment prices in Seoul rose by 0.02% in the fourth week of February, expanding the increase from 0.01% the previous week. After recording no change (0.00%) in both the first and second weeks of February, prices have risen for two consecutive weeks. By region, Seocho (0.06%), Songpa (0.05%), Gangnam (0.03%), Dobong (0.03%), and Seongbuk (0.03%) showed increases. In Seocho, Banpo-dong Banpo Xi and Bangbae-dong Shindong-A rose by 25 million to 50 million KRW, and in Gangnam, Apgujeong-dong Shinhyundai, Miseong 2nd Complex, and Dogok-dong Dogok Hanshin increased by the same amount. In Songpa, Jamsil-dong Woosung 1st, 2nd, and 3rd complexes and Pungnap-dong Geukdong rose by 20 million to 50 million KRW.

Yeokyung Lee, senior researcher at Real Estate R114, analyzed, "The upward trend in Seoul apartment prices continued for two consecutive weeks, supported by rising asking prices in Gangnam-area reconstruction complexes where project expectations have grown," adding, "The upward trend in reconstruction apartment prices is likely to continue for the time being."

In the same week, KB Real Estate reported that Seoul apartment prices rose by 0.01%, maintaining the previous week's rate of increase. After a slight decline from 0.02% in the first week of February to 0.01% in the second week, the same figure has been maintained for three consecutive weeks, indicating a continued upward trend. Geumcheon-gu rose by 0.05%, with inquiries centered around station-area complexes due to expectations following the groundbreaking of the Sinansan Line. Gangnam-gu also rose by 0.04%, remaining a region of strong investment interest.

On the other hand, the public agency Korea Real Estate Board reported that the rate of change in Seoul apartment sale prices was -0.03%, widening the decline from the previous week (-0.02%). Jungnang-gu, which had shown a 0.01% increase until the previous week, fell by 0.01%, causing all 25 autonomous districts in Seoul to turn downward. Seoul apartment prices have been declining for six consecutive weeks. The Korea Real Estate Board explained, "With a decrease in transaction volume, sales have been mainly of urgent sale properties priced below previous records, slightly expanding the decline."

The reason for the differing results between private and public research agencies lies in differences in sample size, the ratio of apartments to houses in the sample, and survey methods. Regarding sample size, the Korea Real Estate Board surveys 32,000 households, while KB Real Estate surveys 36,000 households. The ratio of apartments to houses is, in order of apartments, multi-family houses, and detached houses: Korea Real Estate Board has 76%, 14%, and 10%, respectively, while KB Real Estate has approximately 88%, 6%, and 6%. Both agencies base their data on actual transaction prices registered with the Ministry of Land, Infrastructure and Transport, but the Korea Real Estate Board collects statistics through direct on-site surveys by investigators. In contrast, KB Real Estate reflects the possible transaction prices in its index for complexes with no sales.

However, some express concern that despite different standards, the conflicting results of rising and falling prices are causing confusion in understanding market trends. In particular, there is criticism that the government's assessment, based on the Korea Real Estate Board's results, that housing prices have entered a trend of downward stabilization may be premature. Eunhyung Lee, senior researcher at the Korea Institute of Construction Policy, said, "Housing supply in Seoul is still insufficient, and loan regulations blocking housing transactions do not eliminate purchasing demand itself," adding, "Artificial suppression could act as a factor for a sharp rise in housing prices in the future."

In fact, according to private institutions such as KB Kookmin Bank, Seoul and the entire metropolitan area have never recorded negative rates of change. Furthermore, according to the 'KB Real Estate Report' released by KB Financial Group's Management Research Institute on the 20th of last month, 64% of real estate experts surveyed expect housing prices to rise further this year. Especially, 74% of experts predicted an increase in housing prices in the metropolitan area. This survey was conducted with 161 real estate experts from construction, development, academia, and finance sectors.

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