This Year’s Apartment Prices and Transaction Volume Hit Record Lows... Jeonse Transactions Surpass Apartment Sales

Nationwide, Capital Region, and Local Areas See Record Monthly Apartment Price Decline
Apartment Sales Transactions Fall Below 500,000 for the First Time This Year
Total Sales Amount Decreases by Over 100 Trillion Won
Jeonse Transactions Reach 546,000 Units, Surpassing Sales Volume

[Image source=Yonhap News]

[Asia Economy Reporter Kim Min-young] This year, the price fluctuation rate and transaction volume in the apartment sales market are expected to record the lowest levels since the Korea Real Estate Board began publishing statistics. The housing market rapidly cooled as demand sentiment sharply contracted due to increased financial burden from interest rate hikes and the impact of the global economic downturn. As apartment transaction volumes hit rock bottom, the volume of jeonse (long-term lease) transactions is expected to surpass apartment sales transactions for the first time this year.

According to Zigbang on the 19th, the monthly apartment price change rate nationwide and in the metropolitan area turned negative in February this year, with the decline widening as the year-end approaches. In the provinces, the shift to a decline occurred later than in the metropolitan area, starting in May, but the decline deepened, with the apartment sales price change rate in November this year recording -2.02% nationwide, -2.49% in the metropolitan area, and -1.57% in the provinces. All regions?nationwide, metropolitan, and provincial?experienced the largest monthly decline on record.

By city and province, prices fell in all areas except Jeonbuk, Jeju, and Gangwon. In particular, Sejong recorded a price change rate of -12.0%, marking the steepest drop in apartment prices nationwide. Seoul also saw a significant decline of -4.9%, and Ulsan, Gyeonggi, Daejeon, Incheon, and Daegu all fell by more than 5.0%. The decline was more pronounced in specific areas than in provincial regions, likely because areas with concentrated investment in urban centers saw the apartment market shrink significantly due to economic sluggishness and interest rate hikes.

Annual Nationwide Apartment Sales Volume

With apartment transactions at an unprecedented low level, apartment transaction volumes are expected to fall below jeonse transaction volumes for the first time this year. From January to October this year, apartment sales transactions nationwide totaled 262,000, marking not only the lowest transaction volume ever but also the first time it is expected to fall below 500,000. The metropolitan area recorded 76,000 transactions, and the provinces had 186,000 transactions. Since the metropolitan area data is only up to October, two more months of transactions remain, but if the current trend continues, the transaction volume is expected to fall short of 100,000.

As sales in the metropolitan area stagnate, the transaction amount in the metropolitan area is expected to be lower than that in the provinces this year. As of the 14th, the total apartment sales transaction amount nationwide was 70.8 trillion won, expected to decrease by more than 100 trillion won compared to last year. If the current transaction trend continues, it is unlikely to surpass 80 trillion won and is expected to remain at a level similar to 2007. The metropolitan area recorded 33.3 trillion won, and the provinces 37.5 trillion won, with provincial transaction amounts surpassing the metropolitan area for the first time since 2010.

Yearly Nationwide Apartment Jeonse Transaction Volume

Jeonse transaction volumes are also sluggish. As of the 14th, apartment jeonse transactions nationwide totaled 546,000, down 46,000 from 592,000 in 2021. Although jeonse transactions decreased compared to last year, the volume remained above 500,000, so the decline was less severe than in sales transactions. This year, apartment jeonse transactions recorded 333,000 in the metropolitan area and 213,000 in the provinces.

Apartment jeonse prices also shifted to a downward trend this year, with the decline widening, showing price movements similar to the sales market. In November this year, the apartment jeonse price change rate was -2.36% nationwide, -3.21% in the metropolitan area, and -1.57% in the provinces, marking the lowest monthly change rate on record, similar to sales prices.

Ham Young-jin, head of Zigbang Big Data Lab, said, "The increased burden on tenants for jeonse loans due to interest rate hikes is believed to be the cause of the jeonse price decline."

This year, the total apartment jeonse transaction amount nationwide reached 177.4 trillion won. The total jeonse transaction amount exceeded the total sales transaction amount by 106.7 trillion won this year, marking the first time since related data was disclosed in 2011 that the nationwide jeonse transaction amount surpassed sales transaction amount.

Ham Young-jin of the Big Data Lab said, "It does not seem easy for the overall apartment market slump to recover quickly next year," adding, "The main causes of this year's slump are unlikely to be resolved next year and may deepen further."

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