[Housing Price Rebound vs. Further Decline]② Resurrected Transactions... Nationwide Recovery to 20,000 Cases

Monthly transaction volume in Seoul rises to around 1,000 cases
However, contracts mainly for low-priced high-quality quick sales
"Recovery may slow down after the moving season"

Since the government announced the January 3rd measures to prevent a hard landing in the real estate market, the transaction freeze has been easing. In particular, with most of the regulated areas in the metropolitan area lifted, Seoul has recovered to 1,000 transactions per month, Gyeonggi Province to 4,000, and Incheon to 1,300. As the halted transactions revived, hopeful expectations that housing prices will recover have also grown. However, it remains uncertain whether the recovery trend will continue after all the cheap urgent sale properties are exhausted.

On the 6th, Asia Economy analyzed the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system and found that nationwide apartment sales transactions exceeded 20,000 for two consecutive months, with 20,080 in January and 21,436 in February. Nationwide apartment sales transactions had remained in the 10,000 range from July to December last year due to the impact of interest rate hikes. However, as the government began large-scale deregulation related to loans and subscription through the January 3rd measures, the market started to warm up.

Transaction Volume Recovers in Various Areas Including Seoul, Gyeonggi, and Incheon Following Deregulation of Regulated Areas

In particular, in the metropolitan area, all areas except Gangnam, Seocho, Songpa, and Yongsan districts in Seoul were removed from the regulated areas, leading to a recovery in transaction volume. According to the Seoul Real Estate Information Plaza, apartment sales transactions in Seoul reached 1,408 in January. After hitting a low of 559 in October last year, the volume hovered below 1,000 throughout the second half of the year but sharply increased after the announcement of the measures. February apartment transactions were 1,088, slightly lower than January but still above 1,000. Since the actual transaction reporting deadline has not yet passed, there is room for transaction volume to increase.

By region, Gangdong-gu, adjacent to the Gangnam 3 districts, surged from 46 transactions in December to 122 in January. Nowon-gu, which has many old and low-priced properties with high reconstruction potential, also increased from 57 to 133 during the same period. Dobong-gu saw a sharp rise from 19 to 67. A representative from a real estate agency in Nowon-gu explained, "Contracts increased mainly for urgent sales offered at low prices," adding, "With the launch of the special Bogeumjari loan, many are looking for properties under 900 million won, and some are buying reconstruction-pursuing apartments as gap investments without loans."

The same trend was observed in Gyeonggi Province, where remaining regulated areas such as Gwangmyeong, Hanam, and Bundang in Seongnam were deregulated. According to the Gyeonggi Real Estate Portal, apartment sales transactions in Gyeonggi were 4,570 in January and 4,153 in February. After recording 3,156 in December last year, the volume exceeded 4,000 for two consecutive months. In particular, Seongnam surged from 89 to 1,223, and Hanam from 64 to 130.

The recovery in transaction volume was also steep in Incheon, where housing prices had fallen significantly. Apartment sales transactions, which hovered around 900 in December last year, recorded over 1,300 in both January and February this year?1,367 in January and 1,393 in February. Since the actual transaction reporting deadline remains, February's transaction volume is likely to surpass 1,400.

Seoul apartment view from Namsan [Image source=Yonhap News]

Most Regulations from the Moon Administration Disappear... Uncertainty Remains Whether Transaction Recovery Will Continue After Exhaustion of Urgent Sale Properties

The recovery of transaction volume was identified as the top priority to prevent a hard landing in the market. Just before the January 3rd measures, Land Minister Won Hee-ryong said, "Housing prices go up and down, but the situation where people cannot move due to transaction freezes is a big problem," adding, "The state will support at least the activation of transactions."

Through the January 3rd measures, most of the regulations introduced during the Moon Jae-in administration were removed. With the deregulation of regulated areas, loan limits such as the Loan-to-Value (LTV) ratio were expanded, and heavy taxation on multi-homeowners, including comprehensive real estate tax and capital gains tax, was eliminated. As a result, high-quality urgent sale properties that are cheap yet have good location and quality are quickly being exhausted. Additionally, the special Bogeumjari loan, which lends up to 500 million won for houses under 900 million won, has revived transactions in the 600 million to 900 million won range.

However, experts view it as uncertain whether the recovery in transaction volume will continue after the cheap properties that rushed into the market are exhausted. Kyunghee Yeo, senior researcher at Real Estate R114, analyzed, "After the January 3rd measures, actual buyers who had stayed in the rental market started purchasing discounted urgent sale properties, increasing transaction volume," but added, "Still, supply exceeds demand, and it is not easy to close deals at higher asking prices, so after the urgent sale properties are exhausted, the recovery in transaction volume may plateau."

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