迎秋旺季... Where Are House Prices Heading After Chuseok?

Deputy Prime Minister for Economy Choo Kyung-ho "No Consideration to Lift Regulations on Mortgage Loans Exceeding 1.5 Billion Won"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Min-young] Due to factors such as interest rate hikes and weakened buying sentiment, the real estate market is expected to continue experiencing a transaction freeze even after Chuseok. Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho clearly stated that he is "not considering" easing the regulation banning mortgage loans on apartments priced over 1.5 billion KRW, eliminating any possibility of demand revival centered on switching to high-priced apartments. It is widely expected that demand during the typically peak autumn moving season will also be low.

According to the Seoul Real Estate Information Plaza on the 11th, the number of apartment sales in Seoul from January to August this year was 8,979. Considering that the total number of apartment sales in Seoul during the same period last year was 34,577, this represents a sharp drop to about one-quarter of last year's level. Although the reporting period for August has not yet ended, so the final transaction volume may increase, given the recent market atmosphere, the likelihood of a significant increase is low.

Housing prices are also showing a clear downward trend. According to the housing price trend survey released by KB Kookmin Bank, nationwide housing prices in August fell by 0.14% compared to July. This is the first nationwide price decline since July 2019 (-0.01%), marking 3 years and 1 month. Looking only at Seoul apartment prices, they fell by 0.15% in August, and major provincial cities such as Sejong (-0.81%), Daejeon (-0.77%), and Daegu (-0.54%) also experienced significant declines.

The regulation banning mortgage loans on apartments priced over 1.5 billion KRW, which has emerged as a variable in the transaction market, is certain to continue, extinguishing expectations that the market centered on high-priced apartments will revive. Recently, due to the housing market slump and interest rate hikes deepening the transaction freeze, media reports suggested that the government might lift the mortgage loan ban on apartments over 1.5 billion KRW. In response, Deputy Prime Minister Choo stated at a Broadcasting Reporters' Club discussion on the 7th, "We are not considering lifting it."

Deputy Prime Minister Choo added, "We are carefully monitoring the overall market trend, so if necessary, we will first lift restrictions in designated adjustment areas, and after presenting measures on the excess profit recovery system for reconstruction, we plan to take more time to observe the market situation before deciding on financial regulations."

Although it is the peak autumn moving season, it seems difficult for sales demand to increase. The impact of interest rate hikes is so significant that even with the arrival of the autumn moving season, demand for home purchases is unlikely to revive. This is also confirmed by statistics reflecting buyer sentiment. According to the Korea Real Estate Board, as of the survey on August 29, the Seoul apartment sales supply-demand index was 81.8, down 1.1 points from last week (82.9). This is the lowest figure in about 3 years and 2 months since the survey on July 1, 2019 (80.3).

This index has been declining for 17 consecutive weeks since May 9 this year. The sales supply-demand index indicates that the lower it is below the baseline of 100, the more sellers there are compared to buyers in the market. The index first fell below the baseline of 100 on November 15 last year (99.6), and the state of supply exceeding demand has continued for 32 consecutive weeks up to this week.

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