Capital Region Sale and Jeonse Prices Fall Together for 14 Consecutive Weeks...Entering a Major Downturn?

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

[Asia Economy Reporter Kim Hye-min] Both sale prices and jeonse prices in the Seoul metropolitan area have declined for 14 consecutive weeks. This is due to demand shrinking amid rapid interest rate hikes and loan regulations, resulting in the near disappearance of sales transactions. As only truly cheap urgent sales compared to market prices are occasionally traded, concerns are rising that the market may be entering a major downward trend.

According to Real Estate R114 on the 17th, apartment sale prices in Seoul this week fell by 0.01% compared to the previous week. Reconstruction projects remained flat, while general apartments dropped by 0.02%.

Transaction volumes are at a cliff level. The apartment transaction volume for July, disclosed by the Seoul Real Estate Information Plaza, was 641 cases, not even reaching 50 cases in each of the 25 autonomous districts. Gangnam-gu, which has the highest apartment transaction volume, recorded only 49 cases. Considering that Gangnam-gu has about 120,000 existing apartments and approximately 3,000 licensed real estate agents, this effectively means transactions have disappeared.

By region, most of the 25 autonomous districts declined, with no areas showing an increase. The order of decline was ▲Geumcheon (-0.11%) ▲Gangseo (-0.07%) ▲Seodaemun (-0.07%) ▲Gwanak (-0.05%) ▲Guro (-0.05%) ▲Nowon (-0.03%).

Outside Seoul, the decline was even greater. New towns fell by 0.03% compared to the previous week. In particular, the decline was more pronounced in relatively first-generation new towns. By region, the order was ▲Bundang (-0.09%) ▲Pyeongchon (-0.08%) ▲Paju Unjeong (-0.02%) ▲Dongtan (-0.01%). Gyeonggi and Incheon fell by 0.05% compared to the previous week, with significant drops in ▲Goyang (-0.14%) ▲Incheon (-0.13%) ▲Seongnam (-0.12%) ▲Anyang (-0.1%).

The jeonse market continued to experience a psychological contraction due to falling sale prices and a shift to the monthly rent market caused by increased loan interest burdens.

Seoul's jeonse prices fell by 0.02% compared to the previous week. By region, the order was ▲Geumcheon (-0.18%) ▲Guro (-0.13%) ▲Yongsan (-0.07%) ▲Gangdong (-0.05%). New towns fell by 0.05%, and Gyeonggi and Incheon by 0.07%.

Yoon Ji-hae, chief researcher at Real Estate R114, said, "The issue of interest rate hikes tightening the housing market is expected to continue until the end of this year, and regulations on loans, taxes, and subscription rights centered on individual areas such as speculative overheating districts and adjustment target areas are also ongoing. If there is no significant change in government policy, it is expected that demand for home ownership will be difficult to revive in the short term."

Chief researcher Yoon added, "Since housing transaction volumes tend to decrease more in the second half of the year than in the first half, there is a high possibility that urgent sales priced lower than market prices will continue to appear in major metropolitan areas that had increased their price gains recently based on transportation improvements over the past one to two years."

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