Due to Continued Interest Rate Hikes... Largest Drop in Housing Prices in 14 Years

A red light is on at a traffic signal near an apartment in downtown Seoul. (Photo by Asia Economy db)

[Asia Economy Reporter Ryu Taemin] Amid a frozen real estate market, nationwide housing prices (apartments, row houses, detached houses) in November showed the largest decline in over 14 years. In particular, the apartment market experienced a steeper drop, deepening the downward trend.

According to the 'November Nationwide Housing Price Trend Survey Results' released by the Korea Real Estate Board on the 15th, the comprehensive housing sale price in Seoul fell by 1.34% compared to the previous month. This is the largest drop in 13 years and 11 months since December 2008 (-1.39%) during the global financial crisis.

Comprehensive housing sale prices nationwide (-1.37%) and in the metropolitan area (-1.77%) also saw larger declines compared to the previous month. This represents the largest drop on record. Gyeonggi Province fell by 1.91% compared to the previous month, nearing a 2% decline, while Incheon dropped by 2.41%, exceeding a 2% monthly decline.

The Real Estate Board explained, “The ongoing trend of base interest rate hikes and expectations of prolonged real estate price declines have led to continued cautious market sentiment.”

The apartment market showed an even steeper decline. Apartment prices in Seoul fell by 2.06% this month, marking the largest drop ever recorded. Nationwide and metropolitan area apartment prices fell by 2.02% and 2.49%, respectively, last month. This is the largest monthly decline since the Real Estate Board began price surveys in December 2003.

Jeonse (long-term lease) prices also continued to weaken. Last month, the comprehensive jeonse price for housing in Seoul dropped by 1.84%, nearly double the previous month’s decline (-0.96%). Incheon (-2.42%) and Gyeonggi (-2.36%) also saw larger declines than the previous month.

Seoul apartment jeonse prices fell by 2.89%, increasing the decline by more than 1 percentage point compared to the previous month (-1.84%). The monthly decline rate for Seoul apartment jeonse prices last month was the largest in 3 years and 9 months since January 2009 (-1.74%).

The Real Estate Board analyzed, “As loan interest rates rise, the burden of financing jeonse deposits increases, and the accumulation of listings intensifies, putting downward pressure on prices. In Seoul, prices are falling mainly in large apartment complexes, while in Incheon, the impact of new supply and jeonse avoidance are causing declines mainly in key areas.”

Monthly rent prices also turned downward. Last month, the nationwide comprehensive monthly rent price fell by 0.11% compared to the previous month, and Seoul recorded a 0.04% decline, reversing the previous month’s rising trend (0.05% and 0.09%, respectively).

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