Seoul Apartment Transactions Surpass 3,000 Units After 20 Months... Rising Talk of 'Housing Price Bottom'

Seoul Apartment Prices Decline Narrowing for 6 Consecutive Weeks
Nowon-gu, Once a 'Yeongkkeul Sanctuary' with Sharp Drops, Also on the Rise
Second Half Reversal Lease Crisis Poses a Challenge

The volume of apartment transactions in Seoul in April rose to the 3,000 range for the first time in 1 year and 8 months. As buying demand recovered, the decline in apartment prices also decreased for the sixth consecutive week. Notably, the transaction volume in Nowon-gu, which experienced sharp rises and falls as a hotspot for '2030 Young Kkul' buyers, surpassed 200 units for the first time in 1 year and 7 months, and housing prices rose for four consecutive weeks. Following the Gangnam area, demand in mid-to-low priced areas in northern Seoul has also revived, cautiously raising the theory that Seoul's housing prices have hit bottom. However, some view it as premature to predict the direction of the real estate market in the second half of the year due to variables such as reverse jeonse difficulties and economic recession.

[Image source=Yonhap News]

Seoul Apartment Transactions Reach 3,000 Units for the First Time in 20 Months

According to the Seoul Real Estate Information Plaza on the 19th, the volume of apartment sales transactions in Seoul in April was recorded at 3,000 units. This is more than five times the 559 units recorded in October last year, when the transaction cliff was severe due to high interest rates. The transaction volume exceeding 3,000 units is the first time in 20 months since August 2021 (4,065 units). After surpassing 1,000 units in January and 2,000 units in February, breaking through the 3,000-unit barrier in April has raised expectations for a recovery in the real estate market.

As buying demand revived, housing prices have also stabilized. According to the Korea Real Estate Board, Seoul apartment prices this week fell by 0.01% compared to last week, marking a slowdown in the decline for six consecutive weeks. Based on this trend, there is analysis that a price increase for Seoul apartments is imminent. The Gangnam 3 districts?Gangnam, Seocho, and Songpa?which have already seen a price increase, are expanding their gains. The Real Estate Board explained, "As the buying demand from actual users increases, sales prices are rising mainly in complexes with excellent location conditions," adding, "Nowon-gu is strong in reconstruction complexes, and Yongsan-gu is strong in large apartment complexes."

Accordingly, complexes are frequently being traded at record prices. The 'Acro Seoul Forest' in Seongsu-dong, Seongdong-gu, Seoul, with an exclusive area of 159㎡, changed hands for 6.75 billion KRW on the 19th of last month. This price is 550 million KRW higher than the previous highest price of 6.2 billion KRW. It took only 24 days to set a new record price. Nearby, Doosan We've with an exclusive area of 131㎡ also set a new record by selling for 1.52 billion KRW on the 22nd of last month.

Recovery Trend in Nowon-gu, the Former 'Young Kkul Hotspot' That Experienced a Sharp Decline

What stands out is the revival of Nowon-gu, where housing prices plummeted due to high interest rates. The apartment transaction volume in Nowon-gu in April was 208 units, marking the first time in 19 months since September 2021 (212 units) that it reached the 200-unit range. Due to the real estate market slump, it fell to 30 units in September last year, recovered to the 100-unit range in January this year, and surpassed 200 units in April.

Nowon-gu is an area where the buying demand of the 2030 generation, targeting mid-to-low priced apartments during the previous real estate boom, was concentrated, causing housing prices to rise sharply. From 2020 to 2021, the apartment price increase rate was 11.43%, significantly exceeding the Seoul average increase rate of 7.13% during the same period. However, with the real estate downturn triggered by the interest rate hike rally starting last year, housing prices plunged. The faster the rise, the faster the fall. In the third week of December last year, when the market froze, the decline rate was 1.34%, the highest among Seoul's 25 districts.

However, Nowon-gu is seeing buying demand revive as it becomes the biggest beneficiary of the special Bogeumjari loan and reconstruction regulation easing. According to Real Estate R114, Nowon-gu has the highest proportion of apartments priced below 900 million KRW, which are eligible for the special Bogeumjari loan, at 81% among Seoul's 25 districts. A representative from a real estate agency in Junggye-dong explained, "Nowon-gu was a hotspot for 2030 Young Kkul buyers, so many homeowners could not bear the interest burden during the high interest rate period, resulting in a larger price drop," adding, "As prices fell sharply in a short period, demand for bargain properties increased."

As demand stirs, prices are also recovering. The apartment sale prices in Nowon-gu have been rising for four consecutive weeks through the third week of May after reversing to an upward trend in the fourth week of April, the first time in 1 year and 4 months. In fact, rebound transactions are steadily occurring mainly in mid-to-low priced older apartments in Junggye and Hagye-dong. For example, an 84.6㎡ unit in Hagye 1st Cheonggu, Hagye-dong, signed a sales contract for 830 million KRW on the 2nd, which is 75 million KRW higher than the previous transaction price of 755 million KRW in February. An 84.7㎡ unit in Cheonggu 3rd, Junggye-dong, was traded for 1.063 billion KRW on the 29th of last month, more than 140 million KRW higher than the actual transaction price of 920 million KRW in February.

Yeonghee Yeo, Senior Researcher at Real Estate R114, said, "Nowon has many apartment complexes eligible for the special Bogeumjari loan under 900 million KRW and early-stage reconstruction complexes benefiting from eased reconstruction regulations, so as bargain properties are exhausted, prices have risen," adding, "If young buyers continue chasing purchases, areas like Nowon, Dobong, and Gangseo, which are relatively accessible, are likely to maintain the increased asking prices."

Apartment view in Nowon-gu

Some View 'Bottom Theory' as Premature Due to Variables Like Reverse Jeonse Difficulties in the Second Half

However, since financial market instability has not been completely resolved and concerns about reverse jeonse and economic recession remain, there is uncertainty about whether the real estate recovery trend will continue clearly in the second half of the year.

Won-gap Park, Senior Real Estate Specialist at KB Kookmin Bank, said, "The increasing reverse jeonse difficulties have emerged as the biggest variable for housing prices," adding, "If homeowners who are struggling to raise funds put out bargain properties, it will pressure the sales market."

Youngjin Ham, Head of the Big Data Lab at Zigbang, also said, "Due to deregulation and the slowdown in the base interest rate hike, housing transaction volumes have improved and the decline has slowed," adding, "This atmosphere is expected to continue for a while, but due to interest burden and concerns about economic slowdown, polarization will persist where only limited markets with demand recover."

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