Seoul Apartment Purchase Sentiment Declines for 20 Consecutive Weeks... Falls Below 80 Threshold

September 3rd Week Trading Supply-Demand Index 79.5
Lowest Level in 3 Years and 3 Months
Nationwide Apartment Prices See Largest Drop in 10 Years

Photo by Asia Economy

Amid concerns over economic shocks due to interest rate hikes and a continued decline in housing prices, the Seoul apartment sales supply-demand index has fallen below the 80 mark for the first time in 3 years and 3 months. While the apartment sales market has entered a state of transaction extinction beyond a transaction cliff, apartment prices nationwide also recorded the largest drop in 10 years.

◇No one wants to buy houses= According to the Korea Real Estate Board on the 23rd, this week’s Seoul apartment sales supply-demand index recorded 79.5, down from 80.2 last week. This is the lowest level in 3 years and 3 months since the fourth week of June 2019 (78.7).

The sales supply-demand index being below the baseline of ‘100’ means that there are more people wanting to sell houses than those wanting to buy. The Seoul apartment sales supply-demand index has been declining for 20 consecutive weeks since the first week of May (91.1). Since it fell below the baseline of 100 at 99.6 in the survey on November 15 last year, the market has been in a ‘seller’s advantage’ situation for 45 weeks.

By region, the Northeast area, which includes the ‘Nodogang’ (Nowon, Dobong, Gangbuk districts), recorded the lowest among the five major regions, dropping from 73.8 last week to 73.2. The Southeast area, which includes Gangnam, Seocho, Songpa, and Gangdong districts, fell from 85.9 to 84.9. Gyeonggi Province (83.9) and Incheon (82.2) also saw their indices drop compared to last week. Accordingly, the overall metropolitan area sales supply-demand index fell further to 82.3 from 83.1 last week, marking the lowest level in 3 years and 3 months since the third week of June 2019 (82.2).

Photo by Asia Economy

◇Nationwide apartment prices record largest drop in 10 years= The frozen sales sentiment is driven by interest rate hikes and concerns over falling housing prices. Since the base interest rate hikes began in the second half of last year, housing prices have been on a downward trend. This week, nationwide apartment prices fell by 0.19% compared to last week. The decline widened from last week’s -0.16%, marking the largest drop in 10 years and 4 months since the Korea Real Estate Board began apartment price surveys on May 7, 2012. Seoul recorded a 0.17% drop, marking the 17th consecutive week of decline, which is also the largest drop in 9 years and 9 months since December 10, 2012 (-0.17%).

Transaction volumes have also plummeted to record lows. In July, the number of sales transactions was only 642, and as of the 23rd, with one week left for the reporting deadline in August, the number stands at 614. This is less than one-fifth of the transaction volume a year ago (4,064 transactions).

Although the government lifted regulatory zones across all local areas except Sejong City on the 21st, the prevailing view is that this is insufficient to reverse the market trend. Even Won Hee-ryong, Minister of Land, Infrastructure and Transport, said at a meeting with reporters on the 22nd, "Due to liquidity tightening, downward or tightening factors are expected to operate in the real estate sales and supply markets until next year." Lim Byung-chul, chief researcher at Real Estate R114, said, "Due to rapid base interest rate hikes, the burden of high housing prices, and the impact of economic contraction, it is difficult for buying sentiment to recover," adding, "The weak market is likely to continue."

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