Seoul Apartment Transactions Stay in 3,000 Range for 2 Consecutive Months... Large Complexes Also Sharp Decline

The volume of apartment transactions in Seoul has remained in the 3,000 range for two consecutive months. Even the so-called ‘leading apartments,’ which guide transaction volume and housing price trends, are seeing a sharp decline in transactions. Buyer sentiment, dampened by loan regulations, appears unlikely to recover easily. However, if the trend of interest rate cuts continues next year and housing supply-demand instability persists, there is a forecast that the direction of housing prices could change.

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According to the Seoul Real Estate Information Plaza on the 3rd, the number of apartment sales transactions in Seoul in October was recorded at 3,699. This is a slight increase compared to 3,122 in September but still fails to exceed the 3,000 mark. It is less than half of the peak of 9,199 transactions recorded in July this year. The current transaction volume for last month stands at 1,719. Considering that real estate transactions must be reported within one month from now, the transaction volume is expected to increase further. However, the possibility of surpassing last October’s transaction volume is slim.

The Seoul apartment sales market has frozen due to financial authorities’ loan regulations. Buyer sentiment has been suppressed as loan regulations continue, including the implementation of the second stage of the Debt Service Ratio (DSR) stress test and the authorities’ management of total household loans. Despite the Bank of Korea lowering the base interest rate once in October, commercial bank loan interest rates did not decrease, which also seems to have had an impact. With high interest rates and more stringent loan conditions, buyers have turned cautious.

As transactions decrease, listings are accumulating. According to Asil, a real estate big data company, the number of apartment listings in Seoul has remained between 87,000 and 89,000 since last month. Considering that listings were between 77,000 and 79,000 in July when transaction volume surged, more than 10,000 listings have piled up.

Even in large complexes with many households and active transactions, transaction volumes are sharply declining. Helio City in Garak-dong, Songpa-gu, which has nearly 10,000 households, saw transactions drop from 65 in July to 16 in September and 17 in October. Parkrio in Sincheon-dong, a large complex with 6,800 households, also decreased from 50 transactions to 7 and 16 during the same period. Lake Palace in Jamsil-dong, with over 2,600 households, halved from 13 transactions in July to 6 in October.

In some complexes, sale prices are falling. For example, a 135㎡ unit in Lake Palace was sold for 3.38 billion KRW in September but was sold for 2.85 billion KRW on the 13th of last month. The 84㎡ unit in Parkrio also dropped from 2.57 billion KRW in October to 2.33 billion KRW last month.

The ‘KB Leading Apartment 50 Index,’ which shows price trends of Seoul’s representative leading apartments, recorded 103.1 last month. This was only a 0.63% increase compared to 102.4 in the previous month. The rate of increase has been declining for three consecutive months. This index, composed of the top 50 complexes nationwide with the highest total market value, quickly reflects market sentiment and is called a leading indicator of housing prices.

However, there is a forecast that the situation could reverse next year depending on additional interest rate cuts and supply conditions. Park Won-gap, Senior Real Estate Specialist at KB Real Estate, said, "In Seoul, where housing prices are high, loan regulations have a greater impact," but added, "It is expected that the base interest rate will be cut about twice next year, and if the cumulative cuts exceed a threshold, it will also affect buyer sentiment." Kim Hyo-sun, Senior Real Estate Specialist at NH Nonghyup Bank, said, "Supply shortages are expected to begin in earnest from next year," adding, "If the government fails to alleviate buyers’ anxieties, the situation where housing prices surged in the first half of this year could repeat."

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