Seoul Apartment Prices See Largest Drop in 43 Months... From Transaction Cliff to Transaction Extinction

Real Estate Institute Apartment Price Trends for 5th Week of August
Seoul -0.13%... 14 Consecutive Weeks of Decline
Nationwide Drops Amid Interest Rate Hikes and Further Decline Concerns

Photo by Asia Economy

Amid nationwide real estate markets plunging into the worst transaction freeze in history due to interest rate hikes and recession concerns, apartment prices in Seoul have fallen at the largest rate in 3 years and 7 months. Since turning downward on May 30, prices have declined for 14 consecutive weeks.

According to the Korea Real Estate Board on the 1st, this week (as of the survey on August 26), Seoul apartment prices fell by 0.13%, widening the decline compared to last week (-0.11%).

This is the largest weekly drop since the survey on January 28, 2019 (-0.14%).

Apartment prices in Gangnam-gu and Songpa-gu fell by 0.06% and 0.12% respectively, increasing the decline from last week (-0.04%, -0.12%), while Seocho-gu also dropped by 0.02%, the same as last week.

In addition, in northern Seoul, where mid-to-low priced apartments are concentrated, areas such as Nowon-gu (-0.25%), Dobong-gu (-0.27%), and Gangbuk-gu (-0.20%) saw transaction freezes, leading to an expanded decline compared to last week.

The Real Estate Board analyzed, "Transaction sentiment is shrinking due to concerns over further interest rate hikes and continued housing price declines," adding, "The situation where intermittent transactions focused on urgent sales are perceived as market prices continues, resulting in a wider decline compared to last week."

Gyeonggi-do and Incheon also continued their downward trend due to overall inventory buildup and other factors, falling by 0.21% and 0.29% respectively, with the decline widening compared to last week.

Accordingly, apartment prices across the entire metropolitan area also fell more, from -0.18% last week to -0.20% this week.

As the government announced plans to accelerate redevelopment projects in the first-generation new towns in the metropolitan area, apartment prices in Bundang-gu, Seongnam-si, fell by -0.12%, slightly narrowing the decline from last week (-0.13%).

In Goyang-si, home to Ilsan New Town, the decline also narrowed from -0.12% last week to -0.11%.

The real estate sales market is in the worst transaction freeze ever recorded.

According to the Ministry of Land, Infrastructure and Transport, nationwide apartment transaction volume from the beginning of this year through July was 205,970 cases, a 52.4% decrease compared to the same period last year.

Alongside sales, the jeonse (long-term lease) market is also continuing its weakness.

Seoul apartment jeonse prices fell by 0.09%, widening the decline from last week (-0.06%).

The Real Estate Board analyzed, "Due to increased interest burdens from rising loan interest rates, demand for semi-jeonse and monthly rent conversions is increasing, and transactions are mainly renewal-based," adding, "With new jeonse demand decreasing and prices of listings being adjusted downward, the decline widened compared to last week."

Incheon’s decline expanded from -0.30% to -0.34%, and Gyeonggi-do’s from -0.21% to -0.22%.

Ahead of the autumn moving season, the rental market is flooded with jeonse and monthly rent listings, but new demand has disappeared.

According to statistics from the real estate big data platform Asil, recent jeonse and monthly rent listings for Seoul apartments exceed 55,000. Compared to about 27,000 listings on September 1, 2020, roughly two years ago, this is more than double.

Across Seoul, contracts are only being made when jeonse prices are lowered by 100 million to 200 million KRW or more below market prices, and cases where landlords with impending jeonse expirations fail to find tenants are increasing rapidly.

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