Sharper Decline in House Prices... "Need to Monitor the Effects of Deregulation Measures"

Real Estate R114, Weekly Metropolitan Area Real Estate Trends

[Asia Economy Reporter Kim Hyemin] The decline in sales prices in the Seoul metropolitan area has accelerated. However, as concerns about a hard landing arise due to historically low transaction volumes, the government's regulatory easing policies aimed at inducing a soft landing have emerged, and it is pointed out that the effects on stabilizing concerns about the real estate slump need to be observed for the time being.

According to Real Estate R114 on the 29th, the weekly change rate of apartment sales prices in Seoul fell by 0.07% compared to the previous week, widening the decline. Reconstruction apartments fell by 0.08%, and general apartments by 0.07%.

In Seoul, concerns about an economic recession and the possibility of further declines have led to a disappearance of transactions. By region, Jongno (-0.21%), Guro (-0.2%), Dobong (-0.2%), Gwanak (-0.18%), Gangdong (-0.17%), Songpa (-0.15%), and Yangcheon (-0.1%) all fell by more than 0.1% on a weekly basis.

New towns fell by 0.02% compared to the previous week. By region, Pyeongchon (-0.1%), Paju Unjeong (-0.03%), Bundang (-0.02%), Jungdong (-0.02%), Ilsan (-0.01%), and Dongtan (-0.01%) declined.

Gyeonggi and Incheon fell by 0.05% compared to the previous week. In particular, Incheon, which saw the largest increase last year, experienced a 0.17% decline, showing the most significant price correction. This was followed by Goyang (-0.07%), Seongnam (-0.04%), Siheung (-0.04%), Gimpo (-0.03%), Suwon (-0.03%), and Yongin (-0.03%).

The jeonse (long-term deposit lease) market is showing a clear preference for monthly rent due to the burden of loan interest, with weakness particularly noticeable in areas with high jeonse deposits or large move-in volumes.

Seoul's jeonse prices fell by 0.1% compared to the previous week. By region, Guro (-0.29%), Gwanak (-0.27%), Dongjak (-0.24%), Seongbuk (-0.21%), Gangdong (-0.2%), and Jongno (-0.17%) led the decline. New towns fell by 0.06%, and Gyeonggi and Incheon by 0.07%.

Yoon Jihae, chief researcher at Real Estate R114, said, "Due to the impact of high interest rates, financial sector liquidity tightening, and construction companies' liquidity instability, the government is actively easing loan regulations that had been restricting demand." She added, "Furthermore, with the government announcing an early convening of the Housing Policy Deliberation Committee in November, there is a high possibility that most areas in the Seoul metropolitan area, including Seoul, and Sejong City will be subject to deregulation."

Chief Researcher Yoon predicted, "Regulated areas such as speculative overheating zones and adjustment target areas include package regulations covering LTV and DTI loan restrictions, taxes, subscription, redevelopment projects, private land price ceiling systems, and high-priced housing management areas. Therefore, if areas corresponding to the central metropolitan region are actually deregulated, it could serve as a driving force for normalizing the transaction market."

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