Impact of Interest Rate Hikes... Seoul Apartment Transactions Under 600 Million KRW Surpass 40%

[Image source=Yonhap News]

[Asia Economy Reporter Kim Min-young] In the Seoul apartment market, the proportion of low-priced apartment transactions under 600 million KRW has exceeded 40%. It appears that transactions have been centered on low-priced properties due to the increased burden of loan interest following interest rate hikes.

According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system on the 12th, since the implementation of the capital gains tax surcharge exemption for multi-homeowners on May 10, the total number of reported apartment sales in Seoul was 3,588. Among these, transactions under 600 million KRW (1,445 cases) accounted for 40.3% of the total.

From January this year until May 9, before the capital gains tax surcharge exemption was implemented, the proportion of transactions under 600 million KRW was 36.8%, but this increased by 3.5 percentage points (p) to exceed 40%.

The Bank of Korea raised the base interest rate four consecutive times from April to August, up to an annual rate of 2.5%. Especially from July to September, when the Bank of Korea implemented a 'Big Step' (a 0.5%p rate hike at once), among the 1,173 reported transactions so far, the proportion of transactions under 600 million KRW (535 cases) rose to 45.6%. Amid the ongoing transaction freeze, the phenomenon of relatively low-priced apartments being traded has become more pronounced.

The supply of Seoul apartments increased by more than 5% compared to just before the capital gains tax surcharge exemption for multi-homeowners on May 10, but the severe transaction drought continues. According to the Seoul Real Estate Information Plaza, the transaction volume, which was 1,752 cases in April, sharply decreased to 1,745 in May, 1,079 in June, 639 in July, and 468 in August (end of transaction reporting for this month).

Unlike apartments under 600 million KRW, the proportion of transactions for apartments priced over 600 million KRW up to 900 million KRW, which are more sensitive to loan interest burdens, accounted for 22.2% until May 9 this year but decreased to 19.4% (695 cases) after May 10, and the proportion has further dropped to 18.6% since July.

The proportion of apartments priced over 900 million KRW up to 1.5 billion KRW also decreased from 24.1% to 22.2% during the same period, and the transaction proportion has fallen further to 20% since July.

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