Minimal Impact of Loan Relaxation... Housing Prices in the Seoul Metropolitan Area Continue to Decline

Real Estate R114, Weekly Metropolitan Area Real Estate Trends

[Asia Economy Reporter Kim Hyemin] Although the government implemented measures last week to ease loan regulations, there was little movement in the market. The government adjusted the loan-to-value ratio (LTV) limit to 50% for non-homeowners and one-homeowners in regulated areas and allowed mortgage loans for apartments exceeding 1.5 billion KRW, but the market remained cautious. In fact, the high-interest rate trend continued to suppress buying demand, with a noticeable decline in the Gangnam area of Seoul.

According to Real Estate R114 on the 5th, the apartment sale prices in Seoul during the first week of November fell by 0.07% compared to the previous week, maintaining the same rate of decline as the previous week. Reconstruction apartments dropped by 0.09%, and general apartments decreased by 0.06%.

Although loan regulations were eased in Seoul, buyer sentiment remained cold. Among the 25 autonomous districts, 18 declined, and 7 remained flat. By region, ▲Gangdong (-0.22%) ▲Gwangjin (-0.20%) ▲Nowon (-0.15%) ▲Gwanak (-0.13%) ▲Dobong (-0.11%) ▲Songpa (-0.11%) ▲Gangnam (-0.08%) ▲Seongbuk (-0.08%) showed declines.

New towns fell by 0.04% compared to the previous week. Only Sanbon, Paju Unjeong, and Wirye remained flat, while all other areas declined. By region, ▲Pyeongchon (-0.07%) ▲Bundang (-0.06%) ▲Ilsan (-0.04%) ▲Gwanggyo (-0.04%) ▲Dongtan (-0.03%) declined.

Gyeonggi and Incheon fell by 0.03% compared to the previous week. ▲Bucheon (-0.14%) ▲Anyang (-0.06%) ▲Gunpo (-0.05%) ▲Suwon (-0.05%) ▲Guri (-0.04%) ▲Gimpo (-0.04%) declined.

The jeonse (long-term lease) market continued to decline as the burden of loan interest increased monthly rent conversions and jeonse listings piled up. In particular, Seoul fell by 0.15% compared to the previous week, marking the largest decline since January 25, 2019 (-0.16%). By region, ▲Gwanak (-0.24%) ▲Geumcheon (-0.21%) ▲Seongdong (-0.21%) ▲Seocho (-0.20%) ▲Gangdong (-0.19%) ▲Gwangjin (-0.19%) ▲Guro (-0.19%) declined. New towns and Gyeonggi-Incheon fell by 0.07% and 0.05%, respectively.

Im Byungcheol, head of the research team at Real Estate R114, said, "The U.S. Federal Reserve has implemented its fourth consecutive giant step (a 0.75 percentage point increase in the base interest rate), expanding the interest rate gap with Korea to a maximum of 1 percentage point," adding, "An additional base rate hike is likely at the Bank of Korea's Monetary Policy Committee meeting on the 24th."

Im said, "Although loan regulations were partially eased last week, the rapid rise in interest rates and increased loan interest burdens make it difficult to revive frozen buyer sentiment," adding, "Given the ongoing high-interest rate trend and debt service ratio (DSR) regulations, easing loan regulations alone will have limited effect in changing the market atmosphere."

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