Four out of 10 domestic real estate experts predicted that the low of apartment prices would fall by more than 10% from the current level. More than 70% of respondents said that house prices would bottom out following the second quarter of next year. Due to the steep increase in loan interest rates and unprecedented trade cliffs, the conservative outlook for the short-term market recovery is spreading among experts.
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On the 13th, the Korea Economic Daily conducted a survey of 106 real estate experts from construction and construction companies, financial companies, research institutes, and academia. 5.6% of the respondents said it would drop by more than 20%. That is, the proportion that predicted a 10% decline reached 40.7%. As a single response standard, 32.4% of the respondents viewed the lowest apartment price as a ‘5 to 10% drop’ level. The proportion that predicted a ‘down within 0-5%’ accounted for 26.9%. Of the total 106 respondents, two said that it would rise, drawing attention.
It is unusual that the proportion of a decline of 10% or more reached 40% in a survey of experts. It is interpreted that the market outlook of experts is becoming more cautious with the signs of a long-term recession in the real estate market. If the 10% decline rate is reflected, the average transaction price of an apartment in Seoul, which recorded 1.27 billion won last month, will drop by 127.87 million won. This is the average price in Seoul between May and June last year.
Many experts pointed to psychological factors as the reason for expecting a decline of more than 10%. One respondent answered, “This is because the psychological resistance line once morest the decline in house prices has collapsed due to the rapid increase in sales.”
Park Won-gap, senior real estate expert at Kookmin Bank, said, “The market is shrinking rapidly as fears of falling house prices are rapidly spreading among the 2030 generations, who have flowed into the new housing market,” and “If the average decline of more than 10%, the rent for cans will not only rise one following another, but also have a serious impact on the economy as a whole. Problems can arise.”
“House price decline will go on for at least one more year… If regulations are not lifted, a long-term recession until next year”
Even among domestic real estate experts, the prospect that the real estate market will be difficult to recover for the time being was overwhelmingly high. 90% of experts predict that house prices will continue to fall until the end of the year. While the bottom of the house price is predicted to fall by around 10%, most respondents expected the recovery period to be following the second quarter of next year. Various regulatory policies such as artificial loan regulations, real residence obligations, and restrictions on resale were pointed out as the biggest factor hindering the normalization of the housing market. There are also concerns that the recession will last until next year if the government does not adequately ease regulations.
○ Experts “Decrease more than 5% by the end of the year”
As a result of a survey conducted by the Korea Economic Daily on the 13th of 106 real estate experts, 40.7% of respondents said that apartment sales prices would drop by 3-5% by the end of the year. It was followed by 26.9% of respondents who said they would fall by 1~3%, and 18.5% who said they would fall by 5~10%. Although there is a difference in the extent of the decline, it is analyzed that 98.1% of the total respondents predicted a decline, effectively entering a trending downtrend.
The factors that will affect apartment prices by the end of the year are the increase in loan interest rates (67.6%) and changes in investor sentiment (16.7%) due to global economic fluctuations. A real estate expert said, “Market conditions are getting worse, such as rising interest rates, but it is difficult to find technical rebound issues such as presidential and local elections.” The highest percentage of experts (29.6%) said that the apartment Jeonse price also fell by 3-5%.
However, some experts predicted that house prices would remain flat or rise. An expert pointed out, “It is difficult to say that the market price has changed since only small-scale transactions are made mainly for urgent goods.”
The number of experts who predicted a prolonged decline in house prices is also on the rise. When asked how long the decline in house prices will last, 35.2% answered in the second quarter of next year, and 28.7% answered by the second half of next year. An expert said, “Like the long-term trend of rising house prices, the decline is highly likely not to end in a short period of time.
It was also pointed out that the economy is in a crisis situation that is entering a long-term recession. Kang Eun-hyeon, director of the EH Auction Research Institute, said, “The effect of the interest rate hike will appear in earnest in the second half of this year or the first half of next year.
○ The biggest obstacle in the market is loan regulation
As a way to normalize the frozen housing transaction market, 44.1% of experts said that loan regulations such as mortgage recognition ratio (LTV) should be relaxed. Relief of heavy taxation such as capital gains tax and comprehensive real estate tax accounted for 27.8% of the respondents, and 11.1% of experts chose the ban on mortgage loans of more than 1.5 billion won. Park Hap-soo, an adjunct professor at Konkuk University, said, “We need to be considerate so that homeowners can get new loans and change houses.
As a way to normalize the pre-sale market, where unsold houses are accumulating, the lifting of regulatory areas such as speculation overheated districts (44.4%) and restrictions on loans such as mid-payments (33.3%) were pointed out. One respondent said, “Regulations such as the duty to live and the restriction on resale according to the designation of the regulated area should be resolved promptly when the overheating subsides.”
The biggest factor blocking housing maintenance projects in downtown areas such as Seoul was the recovery of excess profits from reconstruction (45.4%) and the upper price ceiling system (25%).
○“City redevelopment and reconstruction is promising”
One-third (33.3%) of the experts who responded to the survey on the strategy for re-tackling by the end of the year chose ‘city center redevelopment/reconstruction as a promising real estate investment area in the fourth quarter. Unlike profit-oriented real estate, which attracts attention during periods of declining interest rates, such as shopping malls and officetels, reconstruction and remodeling apartments are relatively attractive during periods of rising interest rates. He also gave advice on strategies to catch the latest quick sale. An expert said, “Expectations for reconstruction are still there, but the supply of new apartments in the city center is still scarce.
Kim Je-kyung, head of Tumi Real Estate Consulting, said, “Since the supply of new apartments in Seoul continues to be insufficient, we need to pay attention to the right to move into redevelopment, which will become new apartments in the future.” You have to see,” he said.
There were not a few respondents who said that building investment was promising even during a period of rising interest rates.
An expert who pointed out the Little Building as a promising investment destination explained, “Even if the rate of return falls, the Little Building investment is still a wise alternative because the building has a high potential to increase its value.”
Reporter Lee Hyun-il/Park Jong-pil hiuneal@hankyung.com
