Trading 'Ice Age'... Difficult to Revive Transactions Despite Deregulation of Restricted Areas

KB Real Estate November Week 1 Sales Transaction Index 0.7
Lowest Level Since July 2003
Recovery Slow Despite September Local Adjustment Area Deregulation
Some Areas in Capital Region Freed from Regulations Last Week
Still Insufficient for Real Estate Normalization

[Asia Economy Reporter Hwang Seoyul] Real estate transactions are freezing day by day. Last week, the government lifted regulation zones except for Seoul and some adjacent areas in Gyeonggi Province, marking the third adjustment of regulation zones this year. However, due to reasons such as interest rate hikes, buying demand has weakened, and the recovery of transactions is expected to be slow for the time being.

According to the weekly time series statistics from KB Real Estate on the 14th, the transaction index last week was 0.7, the lowest since the related statistics began in July 2003. This is the second time the transaction index has fallen into the 0-point range since the fourth week of October. The transaction index ranges from 0 to 200, with values above 100 indicating active transactions.

On September 21, the government lifted all regulation zones in local metropolitan cities and provinces considering market conditions, but this has not helped recover transactions. Some local areas have hit rock bottom in the index. Among the five major metropolitan cities (0.2), Busan, Daegu, and Gwangju recorded an index of 0, and among other local areas excluding metropolitan cities, Jeonnam, Gyeongbuk, and Jeju also recorded an index of 0. Other regions also showed very low values in the 0-point range. Daejeon recorded 0.6, Ulsan 0.9. Gangwon was 1.8, Chungbuk 1.1, Chungnam 1.0, showing values in the 1-point range, while Jeonbuk (2.9) and Gyeongnam (4.1) had relatively higher indices among local areas but still remained in single digits.

The metropolitan area is also experiencing sluggish transactions. The metropolitan area index was 0.4, also marking an all-time low. Seoul recorded 0.6, with transactions in Gangbuk (0.2) freezing more than in Gangnam (1.0). Incheon recorded 0, and Gyeonggi also showed a low value of 0.3.

Last week, the government lifted regulation zones in the metropolitan area and Sejong, excluding Seoul, Gwacheon and Seongnam (Bundang and Sujeong), Hanam, and Gwangmyeong, to protect real demand and normalize transactions, similar to the lifting of regulations in local areas. However, this is also expected to be insufficient to normalize the frozen real estate market. Lee Eunhyung, a research fellow at the Construction Policy Research Institute, said, “Although some areas in Gyeonggi, Incheon, and Sejong were deregulated, it is difficult to expect real estate transaction activation with this alone due to loans and interest rate hikes.”

In fact, the core cause of the current real estate slump, the buying demand, also shows no signs of recovery. Last week, the buyer dominance index also hit an all-time low at 15.0. The buyer dominance index ranges from 0 to 200, with values above 100 indicating ‘more buyers’ and below 100 indicating ‘more sellers.’ The metropolitan area recorded 13.8, the five major metropolitan cities 9.1, and other local areas excluding metropolitan cities 22.6.

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