Apartment Transaction Cliff... Record Low in Sales Transactions

59% of Housing Types in the First Half
Clear Dominance in the Capital Area... Continued Slump in the Second Half

[Asia Economy Reporter Hwang Seoyul] In the first half of the year, the proportion of apartment sales transactions among all housing types recorded the lowest level ever. The decline was particularly pronounced in the Seoul metropolitan area, where apartment prices are higher, compared to provincial regions. Market analysts predict that with the absolute volume of apartment sales transactions also decreasing significantly, the housing market is expected to remain sluggish in the second half of the year.

According to the Korea Real Estate Board's housing sales transaction statistics on the 1st, the proportion of apartment sales transactions among all housing types nationwide in the first half (January to June) was 59.35%, marking the lowest since statistics began in 2006. This figure has shown a continuous decline for two years, having been 72.82% in 2020 and 66.68% last year. Housing types included in sales transactions are single-family, multi-family, multiplex, row houses, and apartments.

The decrease in the proportion of apartment sales transactions among all housing types is particularly evident in the Seoul metropolitan area. Except for Gyeonggi Province, Seoul and Incheon saw apartment sales transaction proportions fall well below 50%, showing a clear downward trend. In Seoul, the proportion dropped to 28.42%, down 11.94 percentage points from 40.36% last year, and nearly halved compared to 54.28% in 2020. Incheon also saw a 21.5 percentage point decrease to 36.64% compared to last year. Gyeonggi Province recorded a higher proportion at 52.86% this year compared to Seoul and Incheon, but this still represents a significant decline from 70.06% last year and 77.32% in 2020. Conversely, in provincial areas outside the metropolitan region, the apartment proportion was 70.12%, showing a slight decrease from 73.24% last year and 76.20% in 2020.

This is analyzed to be because relatively high-priced apartments are concentrated more in the metropolitan area than in provincial regions. According to data from the Korea Real Estate Board, the average apartment sale price in the metropolitan area was 753.629 million KRW in June, whereas in provincial areas it was 292.388 million KRW. Seoul recorded an average of 1.148214 billion KRW. Due to tightened loan regulations making financing difficult, areas with many high-priced apartments experienced a sharper decline in sales volume. Furthermore, with the base interest rate rising to 2.25% last month, buyer sentiment has further weakened. Last month, the nationwide sales supply-demand index was 92.7, while the metropolitan area's index was even lower at 89.9.

Apartment sales volumes in the first half of the year have decreased across both the metropolitan and provincial areas. This year, the nationwide apartment sales volume (184,134 cases) also recorded the lowest level ever. In the metropolitan area, apartment transactions (53,408 cases) decreased by 68.06% compared to the previous year, while in provincial areas (130,726 cases) the decrease was 36.48%.

Experts expect this trend to continue into the second half of the year. Park Hapsu, adjunct professor at Konkuk University Graduate School of Real Estate, said, "With the perception that housing prices have peaked and loan regulations tightening, not only has borrowing capacity decreased, but interest rates are also uncertain as to how high they will rise. Buyer sentiment is inevitably shrinking, so this situation is expected to persist through the second half of the year." Lee Hyuncheol, director of the Apartment Cycle Research Institute, also stated, "Unless regulations on multi-homeowners who have the intention to purchase housing, such as easing acquisition and capital gains tax surcharges, are relaxed, it is highly likely that this trend will continue."

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