Seoul Apartment Prices Decline for 7 Consecutive Weeks... Difficult to Rebound in the Second Half of the Year

Zigbang Survey Results: 6 out of 10 People Say "House Prices Will Fall in the Second Half of the Year"

The number of districts in Seoul where the average apartment sale price exceeds 50 million KRW per 3.3㎡ has more than doubled in one year. As of November last year, only Gangnam-gu, Seocho-gu, and Songpa-gu among the 25 districts in Seoul had average apartment sale prices exceeding 50 million KRW per 3.3㎡, but last month, Yongsan-gu, Seongdong-gu, Mapo-gu, and Gwangjin-gu were added, making a total of seven districts. The photo shows the view of Seoul apartments from 63 Square. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Minyoung Kim] As the Seoul real estate market continues to experience a transaction cliff phenomenon, expectations for a decline in housing prices in the second half of the year outweigh those for an increase. This is due to the burden of interest costs following interest rate hikes, which is expected to shrink the housing market. While some opinions suggest that the current housing price trend is not at a level of a major decline, the dominant view is that it will be difficult for housing prices to reverse and rise in the second half of the year.

According to the Seoul Real Estate Information Plaza, the number of apartment sales in Seoul in June was recorded at 960 transactions (as of the 15th). Even considering that the registration reporting deadline (30 days) has not yet passed, this shows a clear decline compared to the same month last year (3,943 transactions). The transaction cliff phenomenon is becoming the norm as buying demand continues to shrink due to interest rate hikes and perceptions of housing prices having peaked.

As transactions shrink, Seoul apartment prices are also stalling. According to the weekly apartment price trend by the Korea Real Estate Board, the apartment sales price index in Seoul for the second week of July (as of the 11th) fell by 0.04% compared to the previous week, widening the decline. This weekly decline of 0.04% is the first in 2 years and 2 months since the second week of May 2020. Except for Seocho-gu (0.03%), where the increase expanded compared to the previous week, all other areas among Seoul's 25 districts declined. Yongsan-gu, which had consistently recorded an upward trend before and after the presidential office relocation issue, fell by 0.01% compared to the previous week, turning to a downward trend. This is the first time Yongsan-gu has turned downward in 16 weeks since the third week of March this year (―0.01%). Gyeonggi and Incheon fell by 0.07% and 0.04%, respectively. Nationwide apartment prices fell by 0.03%, the same as the previous week.

Expectations that housing prices will continue to decline in the second half of the year are dominant. According to a survey conducted by Zigbang targeting 1,727 app users regarding the outlook for the housing sales market in the second half of the year, 61.9% of all respondents answered that prices would fall. Six out of ten respondents believed housing prices would drop. The outlook for price increases was 21.1%, and stable prices were 17.0%. This survey was conducted via mobile from June 20 to July 4.

The most common reason for expecting a decline in housing sales prices in the second half was "increased interest burden due to interest rate hikes," accounting for 63.9%. This was followed by a decrease in demand due to the perception that current price levels are high (15.0%), inflationary pressure and economic slowdown (12.1%), and an increase in listings due to the temporary easing of capital gains tax surcharges on multiple homeowners (4.7%).

Other reasons included demand decrease (13.8%) and policy effects such as expansion of public rental housing (12.5%).

Ham Youngjik, head of Zigbang Big Data Lab, said, "Housing prices in the second half of the year are expected to be further influenced by external factors such as additional interest rate hikes, inflation, and economic slowdown, and with continued buying contraction, sales prices will be adjusted downward."

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