Seoul Apartment Transactions Increase Again... Exceeding 2,000 Units for Two Consecutive Months
Published 07 Apr.2023 06:00(KST)
The volume of apartment transactions in Seoul has surpassed 2,000 units for two consecutive months. Following the regulatory easing measures under the January 3rd policy, the real estate market, which had been in a transaction slump, has regained vitality after a long time. However, it remains uncertain whether the upward trend in transaction volume will continue going forward.
According to the Seoul Real Estate Information Plaza on the 7th, the number of apartment sales transactions in Seoul last month was recorded at 2,100 units. This figure is close to the 2,460 transactions recorded in February, and since the reporting period (within 30 days) is still ongoing, the final transaction volume for last month is expected to increase further. It is the first time in 16 months since October 2021 that more than 2,000 apartments changed hands in Seoul in a single month. The volume of apartment transactions in Seoul had plummeted to 559 units in October last year due to the real estate market tightening caused by the US interest rate hikes, so this represents nearly a fourfold increase in just four months.
The proportion of apartments in total transactions has also increased. In February, apartment transactions accounted for 54.4% of the total 3,856 transactions in Seoul, surpassing half. Last month, the proportion of apartment transactions rose further to 60.9% out of a total of 4,036 transactions.
The sharp increase in transaction volume is attributed to the government’s regulatory easing measures aimed at preventing a hard landing in the real estate market. Under the January 3rd policy, all areas except the Gangnam 3 districts and Yongsan district were removed from the regulated zones, and various regulations related to taxes, loans, and transactions were relaxed. Previously, since December last year, the loan-to-value ratio (LTV) for mortgage loans for non-homeowners in regulated areas was raised to 50%, and mortgage loans were allowed even for properties priced over 1.5 billion KRW. As buyer sentiment recovered and low-priced quality urgent sale properties were quickly depleted, transaction volume appears to have increased.
However, experts analyze that the current transaction volume is still lower than in previous years, making it difficult for a full recovery in transactions. In the market, apartment transaction volume is considered a leading indicator that can predict future housing price trends. Yet, there is a prevailing opinion that it is still uncertain whether the current recovery in transaction volume will continue or if it will be just a ‘flash effect’ due to regulatory easing. Although the transaction volume has exceeded 2,000 units, it is far below the average transaction volume of around 5,000 units since 2012.
Ye Kyung-hee, Senior Researcher at Real Estate R114, said, "As urgent sale properties were depleted earlier this year, transactions have slowed again this month," adding, "With the largest-ever drop in publicly announced property prices, the burden of holding taxes has significantly decreased, leading multi-homeowners or owners of high-priced homes to maintain high asking prices rather than urgently disposing of properties, showing a wait-and-see attitude, which could cause transactions to stagnate again."
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