"Apartment Prices Rise but Overall Housing Prices Remain Flat"…Villa Weakness Distorts Market

May Actual Transaction Price Index Rises Simultaneously in Seoul, Metropolitan Area, and Provinces
Clear Avoidance of Villas Due to Empty Lease and Jeonse Fraud
Villa Actual Transaction Price Falls by 0.38%

The temperature gap between the apartment and non-apartment markets is widening. While Seoul apartment prices have been rising for eight consecutive weeks, showing a rebound trend, prices of villas such as row houses and multi-family houses continue to decline. As the price and transaction polarization between apartments and villas intensifies, there is a forecast that the 'separate market' where apartments and non-apartments move independently may continue for the time being.

[Image source=Yonhap News]

According to the Korea Real Estate Board on the 20th, Seoul apartment prices in the second week of this month (as of the 10th) rose 0.04% from the previous week, continuing an eight-week upward trend. The upward momentum sparked in the three Gangnam districts and Yongsan-gu expanded to 19 of the 25 autonomous districts in Seoul.

Even looking at the actual transaction price index, which is said to most accurately reflect the market, apartment prices are showing a recovery trend. The apartment sales actual transaction price index in May rose 0.82% nationwide, marking the fourth consecutive month of increase. The metropolitan area also rose 1.22%, expanding the increase from 1.19% in April, while the provinces rose 0.40%. In the same month, Seoul's actual transaction price index rose 1.43% from the previous month, continuing an upward trend for five consecutive months since January this year. The rebound that started in Seoul appears to be gradually spreading nationwide.

On the other hand, villas are still unable to escape the slump. The row house and multi-family house market, which accounts for more than 30% of the entire housing market in Seoul, is experiencing avoidance due to the spread of jeonse fraud and the risk of "empty jeonse" (Kkangtong Jeonse).

In fact, from January to May this year, nationwide sales transactions of detached/single-family houses and row/multi-family houses (villas) recorded 23,542 and 34,659 cases respectively. Compared to the same period a year ago, they fell by 38.8% and 47.1%, marking an all-time low. In Seoul, villa transaction volume from January to May was 9,306 cases, down 46% from a year ago, hitting a record low. During the same period last year, Seoul villa transactions (17,423 cases) were more than twice the apartment transactions (7,917 cases), but this year apartment transactions (13,373 cases) have surpassed villa transactions (9,306 cases).

According to the May actual transaction price index for row and multi-family houses released by the Korea Real Estate Board, villa prices nationwide fell 0.38%, the metropolitan area fell 0.69%, and Seoul fell 0.48%, turning downward. The nationwide villa actual transaction price index rose in January and February this year, turned downward in March, rose again in April, and fell again in May, showing an unstable trend. This contrasts with apartments, where actual transaction price indices are rising both in Seoul and the provinces.

Experts believe that unless the issues of reverse jeonse difficulties and jeonse fraud are resolved, villa preference will inevitably continue to decline, and the atmosphere of the apartment and non-apartment markets may run parallel. Park Won-gap, Senior Real Estate Specialist at KB Real Estate, said, "In the future, the apartment and non-apartment markets may become separate markets," adding, "If this happens, even if apartment prices continue to rebound, the overall housing price rebound may not appear immediately."

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