[Jiptech] The Betrayal of Transaction Volume

Published 16 Jul.2025 09:00(KST)

Editor's NoteOver 70% of the assets held by Korean citizens are tied up in real estate. A home is our most important asset, as well as the place closest and most comforting to us. We provide essential information for those living with their assets locked in their homes and for those looking to buy or sell. Asia Economy, together with Kim Hyosun, Chief Real Estate Specialist at NH Nonghyup Bank, publishes [Jiptech] every three weeks to help you gain the knowledge you need.

Apartment complex in Jamsil-dong, Songpa-gu, Seoul. Photo by Jo Yongjun

'A drop of water pierces a rock.'

The proverb "Sujeokcheonseok" (a drop of water pierces a rock) means that persistent effort brings about change. Applied to the housing market, even in stagnant markets, continued transactions form prices, and this momentum can trigger further deals, leading to a trend shift. For this reason, transaction volume has long served as a leading indicator of real estate prices.

However, in recent times, this formula no longer applies across the entire housing market. This phenomenon is especially pronounced in key areas such as Seoul's Gangnam district. Even when there are almost no transactions, prices do not fall. On the other hand, a single record-high transaction can drive up the prices of nearby complexes. What used to be considered an anomaly or an illusion has now become a regular occurrence.

This trend is clear when looking at several major apartment complexes in the three Gangnam districts. In complexes where there have been no transactions for months, if a single deal is made at a record-high price, the asking prices of nearby properties immediately rise to match it. Just one transaction becomes the new benchmark for the market.

This is not simply a temporary imbalance of supply and demand. It should be seen as a new trend flowing through the market. We have now entered an era where it is more important to read the market flow based on the location and nature of transactions rather than the total volume. For example, even nationwide policies such as the Bank of Korea's interest rate hikes are met with different responses depending on the housing market conditions in each region. In areas like Gangnam, where prices remain stable despite declining transactions, traditional economic models do not function as they once did.

Why are new trends emerging in certain areas? First, this is a market where sellers are not in a hurry. In areas where scarcity and steady demand combine, price elasticity is low. In Gangnam, new supply is difficult to come by due to delays in reconstruction projects, and strong lending regulations on high-priced apartments from 2019 to 2022 have kept owners' loan ratios low. In addition, the easing of property tax burdens and the recent sharp price increases mean that owners have little reason to rush to sell, so they simply hold on to their properties and do not put them on the market even when there are no transactions.

Second, the characteristics of the core demand group for housing are unique. While they are end-users, they also have strong investment motives, and many are high-net-worth individuals with high liquidity who assign symbolic value to specific properties. For these buyers, securing a particular location or even a specific apartment complex at any time is more important than the appropriate market price. According to statistics on the age of buyers of apartments in Gangnam-gu, which is designated as a regulated area and a land transaction permit zone, those in their 30s and 40s account for about 60% of purchases. The core of the market is relatively young and high-income groups.

Third, the diversity of information has changed the speed and impact of market movements. Through systems that disclose actual transaction prices, various media statistics, YouTube, and online communities, even a single transaction is instantly spread nationwide. As the speed of information increases, the market's expectations for a single transaction have grown. Now, a one-off transaction can serve as a signal for price support or for a buying frenzy.

It is now time to change the way we view the market. In today's housing market, where areas that need a single strong drop coexist with those that require repeated drops, we must read the changing trends within the numbers rather than just the numbers themselves. Accordingly, localized choices and selective policies are necessary.