[Second Half Housing Market Review] "A Pie in the Sky"... Only Purchase Inquiries Overflowing in Gangnam

The area around Eunma Apartment in Daechi-dong, Gangnam-gu, Seoul. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Ryu Tae-min] "There are many listings, but no buyers. Homeowners are gradually lowering their prices one by one." (Representative of A Real Estate Agency in Daechi-dong, Gangnam-gu, Seoul)

The housing sales market in the Gangnam area of Seoul, which was popular for its "smart one home," is also freezing up. This is due to a significant contraction in buying demand caused by interest rate hikes and price fatigue. In particular, while demand to move from the outskirts of the metropolitan area to higher-grade areas still exists, the atmosphere is such that actual purchases are not happening because the homes they own are not selling. 'Mid-Year Housing Market Review'

On the 7th, when the reporter conducted on-site coverage of the brokerage industry in the Gangnam area including Gangnam-gu, Seocho-gu, and Songpa-gu in Seoul, it was confirmed that most apartment complexes are experiencing a "transaction freeze" due to a decrease in buying demand. The representative of A Real Estate near Eunma Apartment in Daechi-dong, Gangnam-gu, Seoul, whom the reporter met that day, said, "With buying inquiries stopping, transactions have drastically decreased," adding, "Asking prices are also dropping below actual transaction prices." In fact, during the more than 30 minutes the reporter visited, no one came to the agency or called for inquiries. A Real Estate explained, "Most agencies have been this quiet recently," and "There was only one proper inquiry in the past month."

In fact, the impact of the contraction in buying demand due to interest rate hikes and price fatigue is spreading to the Gangnam area as well. According to the Korea Real Estate Board, apartment prices in Gangnam-gu fell by 0.01% in the first week of July (as of the 4th). This is the first time Gangnam-gu has recorded a decline in 17 weeks since March 7. Songpa-gu has also continued a downward trend for seven consecutive weeks.

Exterior view of Trizium, Jamsil-dong, Songpa-gu, Seoul (Photo by Park Miju)

The other areas in the Gangnam 3 districts have similarly frozen buying demand. The representative of B Real Estate in Jamsil-dong, Songpa-gu, said, "Homeowners are lowering prices, but customers have stopped coming," adding, "Except for a brief spike in interest before the March presidential election, it's been a ghost town like this." B Real Estate explained, "There is a lot of demand from the outskirts such as Bundang, Magok, and Gwanggyo to move to this higher-grade area, but since the prices of their homes in the outskirts keep falling and they can't sell them, the atmosphere is that actual transactions are not happening."

In fact, the transaction market in the outskirts of Gyeonggi Province also appears to be completely frozen. The representative of C Real Estate in Imae-dong, Bundang-gu, Seongnam-si, Gyeonggi Province, said, "Because there are hardly any sales transactions, real estate agencies are really struggling," and expressed frustration, "Who would buy a house when the housing market outlook is this bleak?"

Moreover, buying demand has been greatly weakened as the Gangnam and Songpa areas were re-designated as land transaction permission zones. On the 15th of last month, Samsung, Cheongdam, and Daechi-dong in Gangnam-gu, and Jamsil-dong in Songpa-gu were re-designated as land transaction permission zones. This re-designation extended the land transaction permission zone until June 22, 2023. These areas have been designated as land transaction permission zones since June 23, 2020, due to the need for price stabilization following the development of the MICE industry in the Jamsil area and the Yeongdong-daero complex development project.

The representative of D Real Estate in Jamsil-dong expressed frustration, saying, "I wonder why areas like Banpo, where ultra-high-end homes are concentrated, are not designated as land transaction permission zones," adding, "If Banpo housing prices rise anyway, real estate prices will all go up together, so designating only Gangnam and Songpa is ineffective."

Meanwhile, the Banpo-dong area in Seocho-gu, which avoided the land transaction permission zone designation, had a relatively relaxed atmosphere. The representative of E Real Estate in Banpo-dong said, "Although buying inquiries are less than last year, transactions are being made to some extent, and prices are holding steady," adding, "In popular complexes, new record-high prices are still being set."

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