Apartment Prices in the Seoul Metropolitan Area Drop More Than Twice as Much... Buying Demand Sharpely Weakens

Amid ongoing transaction freezes due to interest rate hikes and concerns over peak housing prices, the decline in apartment sale prices in the Seoul metropolitan area in May more than doubled compared to the previous month.

According to the "May Nationwide Housing Price Trend Survey Results" released by the Korea Real Estate Board on the 15th, apartment sale prices in the Seoul metropolitan area fell by 0.10% in May compared to the previous month. This decline is more than twice the 0.04% drop recorded in April.

Apartment prices in Seoul fell by 0.01% in May, following a 0.01% decline in April. The drop in apartment prices in Incheon widened significantly from -0.05% to -0.23%. Gyeonggi Province also saw a larger decline, from -0.06% in April to -0.11% in May. The Real Estate Board explained that "due to an overall contraction in buyer sentiment and accumulation of listings, transactions were mainly concentrated on urgent sales, leading to a price decline." Due to domestic and international interest rate hikes and concerns over a real estate market downturn, apartment transaction volumes in the metropolitan area have also decreased to less than half of typical levels.

In the provinces, apartment prices in Busan remained stable, but in Daegu, where new housing supply is abundant, prices fell by 0.78%, widening the decline from -0.63% in April. The cumulative decline in Daegu apartment prices since the beginning of this year reached -2.81% as of last month. Apartment prices in Sejong fell by 0.60% last month, slightly easing from the -0.65% drop in April, but the cumulative decline for the year was -3.65%, the highest among all cities and provinces nationwide. Consequently, nationwide apartment sale prices also shifted from stability in April to a 0.05% decline last month.

The comprehensive housing sale price index (including apartments, multi-family, and detached houses) in the metropolitan area temporarily rose by 0.03% in April due to expectations of regulatory easing after the presidential election, but fell again by 0.04% in May.

Housing prices in Seoul rose by 0.04%, continuing an upward trend for two consecutive months, but Incheon and Gyeonggi Province fell by 0.15% and 0.06%, respectively, reversing the upward trend seen in April (Incheon 0.01%, Gyeonggi 0.03%). Nationwide housing prices rose by 0.01%, a significant slowdown compared to the 0.06% increase in the previous month.

For multi-family housing (villas), Seoul saw a 0.02% increase, up from 0.01% in the previous month, but Incheon and Gyeonggi Province fell by 0.11% and 0.01%, respectively. The decline in multi-family housing prices in Incheon is the first in 2 years and 9 months since August 2019 (-0.03%), and in Gyeonggi Province, the first in 2 years and 5 months since December 2019 (-0.04%).

On the other hand, detached houses continued to rise. Last month, detached house prices in Seoul rose by 0.35%, maintaining a similar increase to the previous month (0.36%), and Incheon (0.26%) and Gyeonggi Province (0.30%) also continued their upward trends. Nationwide, detached house prices rose by 0.24%, the same rate as the previous month.

In the monthly rent and jeonse (long-term deposit lease) market, trends show stabilization in the jeonse market and increases in the monthly rent market.

Last month, jeonse prices for housing in Seoul fell by 0.01%, a smaller decline than the 0.04% drop in April, but Incheon’s jeonse prices fell by 0.17% in May, doubling the 0.08% decline in April. Jeonse prices for housing in Gyeonggi Province fell by 0.01% in April but stabilized in May. Apartment jeonse prices fell by 0.03% in Seoul, while Incheon (-0.33%) and Gyeonggi Province (-0.05%) also continued to weaken.

Monthly rent prices continued to rise. The comprehensive monthly rent price index nationwide increased from 0.15% in April to 0.16% in May. Monthly rent prices in Seoul rose by 0.04% in both April and May, while Incheon and Gyeonggi Province increased by 0.16% and 0.27%, respectively, each expanding by 0.01 percentage points compared to the previous month.

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