Will Nationwide Apartment Prices Fall for the First Time in 9 Years... Which Areas Are at Risk?

Cumulative 0.14% Decline from January to September This Year
Real Estate R114 "Weakness Led by Gyeonggi, Incheon, Sejong, Daegu, and Jeonnam"

[Asia Economy Reporter Kim Hyemin] The average apartment sale price nationwide is increasingly likely to close the year with a decline. It has already fallen by 0.14% cumulatively from January to September. If the current market environment does not change, the weak phase is expected to continue after the Chuseok holiday, making it highly probable that the year will end with a decline. This would be the first downturn in nine years since 2013.

According to Real Estate R114 on the 10th, a total of six regions have turned to a decline compared to last year based on cumulative data up to September. Sejong City saw the largest drop among the 17 metropolitan cities and provinces nationwide, falling by 2.95%. Incheon, which had the steepest rise last year (34.52%), fell by 2.46% due to short-term concerns over the rapid increase. Other areas showing weakness included Daejeon (-2.14%), Daegu (-1.7%), Gyeonggi (-0.46%), and Jeonnam (-0.07%). In particular, Daegu is experiencing a prolonged slump as unsold units have not been resolved despite most areas except Suseong-gu being removed from regulated zones since last July.

Six Areas Including Seoul, Chungnam, and Busan Nearing Decline... Jeju and Gangwon See Up to 2% Growth

Six regions, including Seoul and Busan, are classified as nearing a downturn as recent transactions mainly involve urgent sales. Seoul recorded a cumulative change rate of 0.48% from January to September. Even the previously resilient Gangnam area and Yongsan district have recently begun to show signs of weakness, making a trend reversal difficult.

Other areas such as Gyeongbuk (0.23%), Ulsan (0.23%), Chungbuk (0.18%), Chungnam (0.08%), and Busan (0.06%) showed slight increases, essentially remaining flat.

In contrast to other regions, five areas including Jeju and Gangwon are performing relatively well. Gangwon recorded the highest cumulative increase of 2.02% from January to September. Jeju rose by 1.84%. These two regions are entirely non-regulated areas, allowing relatively free inflow of investment demand compared to other regions. The government’s tax reform plan, which excludes houses valued under 300 million KRW in local official prices from comprehensive real estate tax and capital gains tax calculations, has also created an atmosphere of some speculative demand inflow.

Other regions such as Gyeongnam (1.31%), Gwangju (1.28%), and Jeonbuk (1.22%) also showed increases exceeding 1%.

Experts Advise Caution in Areas with Both Price Weakness and Increasing New Supply

Experts advise caution when entering the market in areas where prices are weakening and new supply within the region is simultaneously increasing. For example, in Incheon, sale prices are clearly weakening while the volume of move-ins and unsold homes is rising. Conversely, Gangwon shows rising sale prices alongside a 20-30% decrease in pre-sales, unsold units, and move-in volumes. Such areas are more likely to continue their current trends.

Yoon Jihae, Senior Researcher at Real Estate R114, said, "Sejong City, which turned weak after a 43% surge in 2020, is seeing a significant decrease in supply volumes such as pre-sales, unsold units, and move-ins, contrary to concerns." She added, "It is necessary to carefully examine each region as there is a possibility of an upward reversal after a certain adjustment period."

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