Housing Price Bottom Theory?... Recent Increase in Transactions Due to Temporary Depletion of Low-Priced and Urgent Sale Properties

Real Estate Info
Analysis of Transaction Volume, Price Change Rate, and Unsold Units
Transaction Volume Before and After First Half Should Increase to 70% of Last Year
Indicates Bottom Confirmed

[Asia Economy Reporter Kim Min-young] Although recent real estate transaction volumes have increased, an analysis suggests it is difficult to view this as a signal of a rebound in housing prices.

Real estate market analysis firm Real Estate Info stated on the 16th, "After analyzing transaction volume, price fluctuation rates, pre-sale households, and unsold households, the theory of housing prices hitting bottom is premature."

(Photo by Budongsan Info)

Looking at nationwide apartment transaction volumes since 2006, transaction volume and prices show similar trends, but prices can only be considered to have risen if properties sold at higher prices than before are traded. Even if transaction volume increases, if it is mainly urgent sales or low-priced listings, prices will decline.

Transaction volumes are still insufficient compared to average levels. According to the Seoul Real Estate Information Plaza, the average monthly apartment transaction volume in Seoul was 6,749 in 2020, 3,498 in 2021, and 1,000 last year. Although it rebounded to 1,220 last month, Real Estate Info views this as still low compared to the past.

Apartment sales volume in the metropolitan area has also not escaped the level of transaction stagnation. In January 2021, before the real estate market downturn, the metropolitan area apartment sales volume was 29,562. January 2020 recorded 31,673, and January 2019, considered a year with low transaction volume, was 10,670. Last month, metropolitan area apartment sales barely surpassed 6,000.

Real Estate Info analyzed, "The current housing market faces many adverse factors such as high interest rates, decreased transaction volume, increased unsold units, reduced new pre-sales, and the possibility of further base rate hikes. The recent increase in transactions is due to a temporary depletion of some low-priced and urgent sale properties. It is unlikely that this transaction momentum will continue."

However, the firm positively evaluated the government's steady release of policies aimed at a soft landing for the real estate market. Last month, the government launched a special Bogeumjari loan with interest rates lower than market rates and unveiled a special law for the redevelopment of aging planned cities, including the 1st generation new towns.

Kwon Il, head of the research team at Real Estate Info, explained, "We can only know if the bottom has passed after the fact, but it is too early to discuss the bottom based on the current transaction levels. Transaction volume needs to increase to about 70% of last year's 298,000 units around the first half of the year, and urgent sale properties must be nearly exhausted to consider it the bottom."

He added, "For buyers, it is more important to decide on purchases focusing on low-priced properties rather than concentrating solely on the bottom."

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