Swaying Apartment Prices in the Seoul Metropolitan Area... Pressure to Lift Regulation Zones Peaks

Largest Ever Drop in Apartment Prices in the Seoul Metropolitan Area Statistics
Sharp Increase in Unsold Units, Buyer Sentiment Frozen Solid
Ministry of Land to Review Deregulation of Restricted Areas This Month

Photo by Asia Economy

Apartment prices in the Seoul metropolitan area have fallen at the largest rate since weekly statistics began being compiled, and buying sentiment has frozen solid, increasing pressure to lift regulatory area restrictions.

According to a survey by the Korea Real Estate Board on the 4th, apartment prices in the Seoul metropolitan area this week (based on the survey as of October 31) fell 0.4%, a larger drop than last week (0.34%). This is the first time since the Real Estate Board began price surveys in May 2012 that the decline rate in apartment prices in the metropolitan area has reached the 0.4% level. Seoul continued its decline for the fifth consecutive month, dropping 0.34% compared to last week’s -0.28%. Gyeonggi (-0.41%) and Incheon (-0.51%) also experienced steep declines.

Along with the price drop, buying sentiment has also sharply contracted. This week, the apartment sales supply-demand index in the metropolitan area was 75.2, down 2.7 points (p) from last week’s 77.9. This is the first time since the last week of January 2013, when it recorded 75.0, marking nearly 9 years and 9 months. The sales supply-demand index being below the baseline of '100' means there are more people wanting to sell houses than buy them. Seoul’s apartment sales supply-demand index also recorded 72.9, the lowest in about 3 years and 6 months. The decline was 2.5p, more than four times larger than last week’s 0.6p.

Unsold homes continue to increase as well. As of the end of last month, the number of unsold houses nationwide was 41,604, up 27.1% (8,882 units) from the previous month. Such a large increase in unsold homes has not occurred since November 2015 (a 54.3% increase from the previous month), nearly 6 years and 10 months ago.

Compared to a year ago (13,842 units), nationwide unsold homes in September tripled, and nearly doubled compared to the beginning of this year. In particular, unsold homes in the metropolitan area reached 7,813 units, increasing 55.9% (2,801 units) in one month, while unsold homes in other regions totaled 33,791 units, up 21.9% (6,081 units).

As the real estate market slump deepens, voices demanding the lifting of regulatory area restrictions are rising across the metropolitan area. In Incheon, eight local governments submitted a petition to the city stating the need to lift regulatory area restrictions. Incheon City plans to compile the opinions of the eight local governments overseeing the adjusted target areas and send an official letter to the Ministry of Land, Infrastructure and Transport. On the 3rd, Ansan City also officially requested the Ministry of Land, Infrastructure and Transport to lift the designation of the entire city as a speculative overheating district and adjusted target area.

Currently, there are 39 speculative overheating districts in Seoul, Gyeonggi, and other areas, and 60 adjusted target areas in Seoul, Gyeonggi, Incheon, Sejong, and others. There are 15 speculative areas in Seoul. Except for Sejong City, regulatory areas remain practically limited to the Seoul metropolitan area including Seoul itself.

The Ministry of Land, Infrastructure and Transport is currently selecting candidates for lifting regulatory area restrictions. Minister Won Hee-ryong plans to hold the Residential Policy Deliberation Committee (Jujeongshim) soon after returning from a business trip to Saudi Arabia earlier this month. Although there are separate criteria for designating regulatory areas, there are no specific criteria for lifting them. Quantitative indicators such as price declines, subscription competition rates, and unsold homes, as well as qualitative judgments including the prospects for reconstruction, redevelopment, and new town construction, are required. A ministry official said, "We will comprehensively consider various conditions such as recent price decline areas, transaction volume changes, and unsold homes to lift regulatory area restrictions."

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