7 out of 10 People Say "House Prices Will Fall Further"... Won Hee-ryong Says "It's Not a Crash Situation Yet"

Seoul Apartment Prices Fall Most in 10 Years
76% Say "Current Housing Prices Are Still Overpriced"
Won Heeryong: "Need to Maintain Downward Stability for a Significant Period"

Photo by Asia Economy

Amid a deepening nationwide real estate market slump, it has been found that 7 out of 10 citizens expect housing prices to fall further over the next year. While the outlook for price declines has reached its highest level in 10 years, the expectation for price increases has hit its lowest point.

On the 22nd, a survey conducted by Gallup Korea from October 18 to 20, 2022, questioned 1,000 adults aged 18 and over nationwide about their "housing price outlook for the next year," with 69% responding that prices would "fall."

Responses indicating prices would "rise" accounted for 12%, "remain unchanged" 14%, and 6% were undecided.

Since June, when for the first time in three years the expectation of price declines surpassed that of increases, the gap has widened with each subsequent survey.

69% "Housing prices will fall over the next year"

With interest rate hikes and concerns over economic recession prolonging the real estate market slump, the decline in apartment prices is also gradually accelerating.

According to the Apartment Price Trend data for the third week of October recently released by the Korea Real Estate Board, apartment prices in Seoul fell by 0.27% compared to the previous week. This marks the largest drop in 10 years and 4 months since June 11, 2012 (-0.36%).

The apartment price declines in Gyeonggi (-0.39%) and Incheon (-0.41%) are also steep. Consequently, the decline in apartment prices in the Seoul metropolitan area widened from -0.28% last week to -0.35% this week. This is the first time since the Korea Real Estate Board began surveying prices in May 2012 that the metropolitan area has experienced a decline rate in the 0.3% range.

Apartment prices in provincial areas also fell more sharply, recording -0.21%, a larger drop than last week's -0.17%, with transactions mainly limited to urgent sales. Due to the simultaneous weakness in both the metropolitan area and provinces, nationwide apartment prices fell by 0.28%, marking the largest decline since the survey began.

76% "Housing prices are still expensive due to a bubble"

In some regions, housing prices have dropped 30-40% from their peak, signaling a full-fledged downward trend, yet the majority of the public still evaluates that "current housing prices remain expensive."

According to a real estate policy public opinion survey conducted by ResearchDNA on behalf of Rep. Heo Jong-sik of the National Assembly Land, Infrastructure and Transport Committee from October 18 to 19, targeting 1,032 adults aged 18 and over nationwide, only 12.0% responded that "current housing prices are appropriate." Those who said prices have "fallen too much" accounted for 9.1%, while 76.1% said "there is still a bubble, so prices are expensive."

Minister of Land, Infrastructure and Transport: "Prices are too high; a prolonged period of downward stabilization is necessary"

Meanwhile, Won Hee-ryong, Minister of Land, Infrastructure and Transport, expressed a view that it is premature to conclude that the current real estate market situation is a crash phase.

At the National Assembly Land, Infrastructure and Transport Committee's audit of the Ministry of Land, Infrastructure and Transport on the 21st, Minister Won said, "Apartment prices nationwide rose by an average of 50%, then fell by about 6%. I do not consider a 6% drop from a 50% increase to be a crash."

He explained, "Currently, sellers' asking prices are set excessively high, and the market's price adjustment function is not working properly. It is difficult to define this as a specific phase."

Earlier, at the audit on the 6th, Minister Won also stated, "Housing prices are too high, so a prolonged period of downward stabilization is necessary, and the government should only manage side effects caused by a hard landing."

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