The Newly Built Apartment on the Right Saw House Prices Drop First

Concerns Over Supply Shortage in Seoul Led to Sharp Rise Since 2017
But Fell 0.54% Until August This Year...Weaker Than Semi-New and Old Buildings
Real Estate R114: "Loan and Interest Burden, Price Entry Barriers to Blame"

[Asia Economy Reporter Kim Hyemin] Due to demand concentration amid supply shortage concerns, the prices of newly built apartments, which rose first in Seoul, have turned bearish first this year.

According to Real Estate R114 on the 25th, an investigation into the cumulative price change rates of Seoul apartments by age from January to August this year showed that newly built apartments aged 1 to 5 years fell by 0.54%. During the same period, quasi-new apartments aged 6 to 10 years increased by 0.86%, and apartments over 10 years old rose by 0.69%.

In 2017, the Moon Jae-in administration announced the 8.2 measures to curb speculative demand and introduced numerous regulations related to redevelopment projects. At that time, with strengthened regulations including the private land price ceiling system and the excess profit recovery system for reconstruction, concerns grew over a shortage of housing supply in urban areas, and combined with the phenomenon of existing listings being withheld, prices of newly built apartments surged sharply.

In fact, in 2017, the sale prices of newly built apartments within 5 years of occupancy rose by 15.56%, while quasi-new and older apartments showed relatively lower change rates of 12.68% and 13.56%, respectively. This trend was similar in 2018 and 2019, but since 2020, a reversal in the price increase rates has been observed.

Yoon Jihae, chief researcher at Real Estate R114, said, "Due to the burden of short-term rapid price increases, loan regulations, and a rising interest rate environment, the price level created a higher entry barrier for buyers of newly built apartments, causing the rate of price increase to slow down quickly and the decline to occur first. The significant price drop in large complexes of newly built apartments concentrated in Gangdong and Songpa also influenced the shift to a bearish trend."

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