Record-Low Transactions, Disappointment in Supply Measures... Widened the Drop in House Prices

Real Estate R114, Weekly Apartment Trends in the Seoul Metropolitan Area

[Asia Economy Reporter Kim Hyemin] Due to an unprecedented transaction freeze, apartments are being traded mainly through urgent sales even cheaper than quick sales, causing the average decline in housing prices to widen. With the Bank of Korea's announcement of additional interest rate hikes and the government's regulatory easing progressing more slowly than market expectations, the number of listings is also increasing. In first-generation new towns and redevelopment promotion complexes, disappointment sales are emerging as expectations for the August 16 supply measures are not being met.

According to Real Estate R114 on the 27th, the apartment price change rate in Seoul for the last week of August fell by 0.02% compared to the previous week, marking three consecutive weeks of -0.02%. Redevelopment and general apartments dropped by 0.03% and 0.01%, respectively.

In Seoul, as the government's regulatory easing is delayed, 10 out of 25 autonomous districts experienced declines. Seocho-gu was the only district to rise, by 0.01%. By region, Gangseo-gu fell the most, down 0.09% from the previous week, followed by ▲Gwangjin (-0.08%) ▲Gangdong (-0.06%) ▲Gangnam (-0.04%) ▲Songpa (-0.02%). In particular, due to delays in the government's redevelopment excess profit recovery system and safety diagnosis regulatory easing, redevelopment promotion complexes such as Jamsil Jugong 5 Complex in Songpa-gu and Hanbo Midomansion 2nd in Gangnam-gu saw housing prices drop by approximately 15 million to 50 million KRW.

New towns, centered on first-generation new towns, are showing a trend of widening declines due to disappointment with government measures. Prices fell 0.03% compared to the previous week, increasing the drop. Among the first-generation new towns, all except Jungdong declined. By region, the order was ▲Gwanggyo (-0.08%) ▲Pyeongchon (-0.07%) ▲Ilsan (-0.06%) ▲Bundang (-0.02%) ▲Dongtan (-0.02%).

Gyeonggi and Incheon showed weakness in most areas due to demand contraction, falling 0.02% compared to the previous week. By region, Pocheon-si fell the most at 0.1%, followed by ▲Osan (-0.08%) ▲Uijeongbu (-0.07%) ▲Seongnam (-0.06%) ▲Yangju (-0.06%) ▲Pyeongtaek (-0.05%) ▲Guri (-0.04%).

The jeonse market is experiencing a shift as demand is moving from jeonse to monthly rent due to rapid interest rate hikes. Coupled with the seasonal off-season, Seoul's prices fell 0.03% compared to the previous week. By region, the order was ▲Gwangjin (-0.18%) ▲Seodaemun (-0.12%) ▲Gangdong (-0.09%) ▲Gangseo (-0.09%) ▲Geumcheon (-0.07%). New towns fell 0.02%, and Gyeonggi and Incheon fell 0.05%.

Yoon Jihae, chief researcher at Real Estate R114, said, "Following the Bank of Korea's historic first big step in July (a 0.5 percentage point increase in the base interest rate at once), this month marks the first time the base rate has been raised four consecutive times," adding, "Both homeowners and those considering purchasing a home need some time to adapt to the changed loan interest rates."

Chief researcher Yoon continued, "Since gradual base rate hikes are expected to continue, the intensity of demand contraction due to loan burdens is likely to increase," and predicted, "Until the market's concerns about a potential economic recession decrease or urgent sales are exhausted and transaction volumes return to past average levels, the current weak phase will continue."

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