Despite the January 10 Measures, Seoul Reconstruction Remained Unmoved... "During Housing Price Decline, Regulation Easing Effect Decreases"

Apartment prices in Seoul remained flat. There was no price change even in reconstruction and aging apartments, which were considered beneficiaries of the government's January 10 measures. On the other hand, jeonse prices rose due to increased demand.

According to Real Estate R114 on the 20th, the rate of change in Seoul apartment sale prices for the third week of this month (as of the 19th) was 0.00%. Jongno (-0.10%), Guro (-0.02%), Yangcheon (-0.02%), and Songpa (-0.01%) declined, while the other autonomous districts recorded no change (0.00%).

There was also no price change in Seoul reconstruction complexes. Although the government eased regulations on the 10th to allow reconstruction to begin without safety inspections for aging apartments over 30 years old since completion, market response has been lukewarm.

Real Estate R114 explained, “Reconstruction apartments tend to be investment properties rather than for actual residence, so during periods of significant housing price decline with sharply reduced demand, the effect of deregulation is inevitably diminished,” adding, “With rising construction and labor costs increasing additional contributions from association members, there is a high possibility of widening differences in the pace of project progress by complex depending on profitability.”

New town apartment prices fell 0.01% for two consecutive weeks. Pyeongchon (-0.03%), Pangyo (-0.02%), and Bundang (-0.01%) declined. Gyeonggi and Incheon rose 0.01%. Uijeongbu (-0.02%) and Yangju (-0.02%) fell, while Incheon (0.04%) and Ansan (0.03%) increased.

The metropolitan area jeonse market continued its upward trend. Seoul and Gyeonggi-Incheon rose 0.01%. In Seoul, areas with good proximity to workplaces such as Jongno (0.1%), Jung (0.09%), Yeongdeungpo (0.05%), Gangseo (0.05%), and Songpa (0.02%) saw increases. In Gyeonggi-Incheon, which has been rising since January, Uijeongbu (0.06%), Ansan (0.05%), and Suwon (0.04%) increased, while Gwacheon (-0.02%) and Paju (-0.01%) declined. New towns recorded no change (0.00%). Gwanggyo (0.05%) rose, whereas Pyeongchon (-0.03%), Dongtan (-0.02%), and Pangyo (-0.02%) fell.

Real Estate R114 stated, “As concerns over further housing price declines grow, demand choosing monthly rent or jeonse over purchase is increasing, narrowing the price gap between sales and jeonse,” adding, “If the downward trend in housing prices strengthens, issues of ‘empty jeonse’ (where the sum of the jeonse deposit and loan amount exceeds 70% of the house price) may arise first in the outskirts of the metropolitan area where the jeonse rate (the ratio of jeonse price to sale price) is high.”

[Image source=Yonhap News]

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