[Housing Prices Rebound vs. Further Decline] ① Despite Numerical Recovery, Cautious Sentiment Persists... Increasing Confusion

Editor's NoteThe real estate market is in turmoil. Various statistics such as transaction volume, sale prices, and unsold units are released weekly and monthly, but it is difficult to discern the trend. It is also questionable whether the government's deregulation policies aimed at preventing a hard landing in the real estate market are actually effective in the market. Especially since the real estate measures announced on January 3, which included easing regulations on multi-homeowners, conflicting forecasts about a 'rebound' or 'further decline' in housing prices have poured in. In response, Asia Economy has examined various phenomena currently occurring in the real estate market and sought expert analysis and forecasts.

[Asia Economy Reporter Cha Wanyong] Since the announcement of the January 3 measures, a chaotic market has unfolded where various real estate statistics and the market show discrepancies. Statistics indicate warmth, while the market points to coldness. This phenomenon appeared temporarily during last year's sharp decline but has intensified since the government's January 3 real estate measures announcement.

From July to December last year, the nationwide apartment sales transaction volume remained around 10,000 cases, but in January and February this year, it exceeded 20,000 cases for two consecutive months. A recovery in actual transaction prices is also detected in some areas. According to the Ministry of Land, Infrastructure and Transport's Real Transaction Price Disclosure System, recent rising transactions have appeared consecutively in complexes such as Helio City in Songpa-gu, Seoul, and the New Town complexes in Mok-dong. Additionally, in the new apartment sales market, where unsold units were rampant, complexes that have sold out are emerging one after another.

[Image source=Yonhap News]

However, this differs somewhat from the actual market sentiment. Although transaction volume has revived, listings still accumulate. The number of listings was 136,492 in January this year and only decreased by 364 to 136,128 as of the 1st of this month. The rebound in actual transaction prices is also limited to certain areas within Seoul and the metropolitan area. Although new apartment sales are continuing to sell out, unsold housing units increased by 7,211 in January alone.

As the phenomenon of temperature differences between statistics and the market continues, real demand buyers are struggling to determine when to buy or sell. Experts' opinions are also divided. Some argue that housing prices have hit bottom, while others maintain that the bottom is still far off and the downward trend will continue.

Investment and Real Demand 'Separate Dishes'... Interest Rate Instability, Factors Sustaining Market Chaos

Some point out that the discrepancy between statistics and the market is due to investment demand and real demand moving separately. It is analyzed that the government's January 3 measures, introduced to guide a soft landing in real estate, focused only on attracting investment demand.

On January 3, the government lifted real estate regulation zones and the price ceiling system for all areas in Seoul and the metropolitan area except for the three Gangnam districts (Gangnam, Seocho, Songpa) and Yongsan-gu. It also eased the 2-3 year residence requirement and 5-10 year resale restrictions, which were significant burdens for subscription, as well as restrictions on interim payment loans for houses priced over 1.2 billion KRW.

Unstable bank loan interest rates are also identified as a factor fueling confusion in the real estate market. While the government pressured banks to lower loan interest rates, the variable mortgage loan interest rate upper limit dropped by 1.23 percentage points from January 1 to February 1. However, with the U.S. Federal Reserve signaling a rate hike this month and the Bank of Korea also hinting at a possible additional rate increase, market interest rates are fluctuating again.

There is a forecast that the chaotic market will continue for some time if interest rates remain unstable after attracting investment demand. Experts advise that since it is difficult to judge whether the current warmth detected in the real estate market indicates a trend reversal or a temporary phenomenon, the market should be continuously monitored for the time being.

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