Seoul Apartment Prices Fall for 9 Consecutive Weeks... Largest Drop in 2 Years and 3 Months

According to Korea Real Estate Board, -0.07% Decline
Nationwide Apartment Prices Falling Further
"Housing Sales Stagnate and Prices Expected to Drop" Forecast

Photo by Asia Economy

As the benchmark interest rates of South Korea and the United States have inverted for the first time in two and a half years, increasing uncertainty in the real estate market, Seoul's weekly apartment prices have fallen at the largest rate in two years and three months.

According to the Korea Real Estate Board's data on the 'Weekly Apartment Price Trends Nationwide for the 4th Week of July' released on the 28th, Seoul's sale prices fell by 0.07%, widening the decline from last week's -0.05%. This 0.07% weekly drop in Seoul apartment sale prices is the largest since the 4th week of April 2020, about two years and three months ago.

The Real Estate Board analyzed, "Although some withdrawal of listings occurred due to the government's announcement of easing the comprehensive real estate tax burden, including the reform plan, the downward pressure on prices caused by concerns over further interest rate hikes is significant," adding, "As buyers remain cautious for a prolonged period, the decline in Seoul has widened."

Among the 14 districts in northern Seoul, most areas saw an expanded decline, recording a weekly sale price drop of -0.11%. Dobong-gu (-0.17%) reflected declines mainly in Dobong and Chang-dong, while Nowon-gu (-0.15%) was affected by falling transactions primarily in small and medium-sized apartments in Sanggye-dong. Seongbuk-gu (-0.15%) saw increased listing backlogs mainly in Jeongneung and Gireum-dong adjacent to northern Seoul, and Seodaemun-gu (-0.13%) experienced a larger decline compared to the previous week due to intensified listing backlogs mainly in Hong Eun and Hongje-dong.

The 11 districts in Gangnam also continued to experience declines across the board. Songpa-gu (-0.04%) saw intensified listing backlogs mainly in large complexes in Jamsil-dong, leading the decline in the Gangnam area due to falling transactions in major complexes. Seocho-gu, which had been the only district maintaining an upward trend, rose by 0.1% this time as well, but the increase narrowed compared to last week's 0.03%.

The decline is also expanding in Gyeonggi Province and Incheon.

In Gyeonggi, where listings are accumulating and rapid sales are occurring in most areas, prices fell by 0.08%, widening the decline from last week's -0.06%.

In Incheon, prices also dropped by 0.10% this week, deepening the decline from last week's -0.08%. In Incheon, listing backlogs are intensifying in new town areas that previously experienced high price increases, due to move-in volumes and concerns over interest rate hikes.

Apartment Sale Price Index Change Rate by City/Province for the 3rd Week of July

As the metropolitan area continues to decline uniformly, the nationwide weekly apartment sale prices also saw a wider drop compared to last week's -0.04%.

The five major metropolitan cities fell by 0.07%, eight provinces by 0.01%, and Sejong City by 0.17%.

Among the 176 announced cities, counties, and districts, the number of areas with price increases decreased from 35 to 31 compared to last week, while the number of stable areas rose from 13 to 14, and declining areas increased from 128 to 131.

Similar to sale prices, jeonse (long-term lease) prices are also facing strong downward pressure.

The nationwide weekly apartment jeonse prices recorded -0.05%, expanding the decline from last week's -0.03%. The metropolitan area saw a widened decline (-0.05% → -0.06%), Seoul maintained the same decline (-0.03% → -0.03%), and provincial areas experienced an expanded decline (-0.02% → -0.03%).

Meanwhile, ongoing interest rate hikes and the resulting increased uncertainty in the housing market have led to continued forecasts that housing sales will stagnate and prices will decline somewhat.

The Korea Development Institute (KDI), in its '2nd Quarter Real Estate Market Trends' report released on the same day, stated, "Due to the sharp rise in market interest rates and uncertainty about the future policy interest rate path, housing sales prices are expected to remain at low levels for the time being, with some price declines." KDI also predicted, "As mortgage and jeonse loan interest rates rise, downward pressure on both sale and jeonse prices will continue."

KDI explained, "The prolonged adjustment in the current housing market is due to rapidly rising loan interest rates and uncertainty about the future interest rate path," adding, "While factors behind the benchmark interest rate hikes, such as inflation and high construction costs, may gradually exert upward pressure on rents, the sharp interest rate increases are unlikely to have a significant impact on housing prices for the time being."

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