KDI "Interest Rate Hikes Expand Decline in House Prices and Jeonse Prices... Decline Until Early 2023"

Announcement of '2022 3rd Quarter KDI Real Estate Market Trends'

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Kwon Haeyoung] A national research institute has analyzed that the decline in housing sales and jeonse prices has widened compared to the previous quarter due to the recent sharp interest rate hikes. The housing market is expected to continue its downward price trend as the interest rate effects are gradually reflected for the time being.

On the 27th, the Korea Development Institute (KDI) announced this in its '2022 Q3 KDI Real Estate Market Trends' report.

KDI explained, "As the base interest rate was sharply raised due to domestic and external conditions, the decline in housing sales and jeonse prices became visible nationwide," adding, "Due to the steep increase in policy rates, both sales prices and jeonse prices in the metropolitan area and non-metropolitan areas fell by similar margins."

In the metropolitan area, housing sales prices dropped from -0.05% in Q2 to -1.19% in Q3, and jeonse prices fell from -0.09% to -1.2%. In non-metropolitan areas, housing sales prices turned from 0.17% in Q2 to -0.54% in Q3, and jeonse prices shifted from 0.04% to -0.55% during the same period, all turning to declines.

On the other hand, the monthly rent index has been rising since 2021, indicating that rental demand has not yet decreased relative to supply.

KDI stated, "High interest rates will be maintained until early 2023, and downward pressure will gradually continue," adding, "In the future, the base interest rate will be adjusted depending on the degree of economic downward pressure and the pace of inflation decline, and price volatility in sales prices is expected to increase according to interest rate conditions." It further noted, "Recent changes in housing prices are due to rapid interest rate fluctuations," and "With housing market supply conditions (new housing supply) not changing significantly for the time being, housing purchase sentiment will move according to the direction of interest rates, increasing price volatility."

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