2024-01-13 04:59:33
Article entered 2024-01-13 13:59:33
Article modified 2024-01-13 13:59:33
The real estate market is cooling quickly. As housing buying sentiment has declined due to the effects of high interest rates and poor real estate project financing (PF), the transaction cliff is deepening.
As the number of apartments for sale in Seoul has piled up to nearly 75,000, and transactions have virtually stopped, housing prices are also entering a full-fledged decline.
A view of downtown apartments from Namsan Mountain in Seoul. News 1
Weekly apartment prices across the country have fallen for seven consecutive weeks. Seoul, where housing demand is the highest, has also been falling for six consecutive weeks. According to the ‘National Weekly Apartment Price Trends for the First Week of January’ published by the Korea Real Estate Agency, apartment prices nationwide fell 0.05% compared to the previous week. It has been declining for 7 weeks since the last week of November last year. However, the decline compared to the previous week was maintained.
Seoul apartment sales prices fell by 0.04 and have been falling for six consecutive weeks. Including Seoul (-0.04% → -0.04%), the metropolitan area (-0.06% → -0.06%) and local regions (-0.04% → -0.04%) all recorded the same decline compared to the previous week.
By region, Songpa-gu (-0.11%) saw the largest decline in housing prices in Seoul, mainly in large-scale buildings built in Munjeong and Jamsil. House prices in Nowon-gu (-0.07%) fell mainly in Sanggye, Hagye, and Gongneung-dong, and in Sangdo, Sadang, and Daebang, Dongjak-gu (-0.07%) and Gangbuk-gu (-0.06%) also fell. In addition, Guro-gu (-0.06%) showed a downward trend, and Guro-Hang-dong (-0.05%), and Gangseo-gu (-0.05%) showed a decline in purchasing sentiment mainly in the main complexes of Yeomchang, Banghwa, and Deungchon-dong.
An official from the Real Estate Institute explained, “As the wait-and-see attitude for buyers is prolonged due to uncertain financial conditions and concerns regarding a slowdown in the real estate economy, downward adjustments in listing prices are gradually underway and the downward trend is continuing, with quick sale transactions appearing even in some preferred complexes.”
Relatively, the decline in house prices in the Noh, Do, and Gang (Nowon, Dobong, and Gangbuk) regions, where the so-called ‘Youngkkeul’ (people who invested with their souls and borrowed money) flocked to the area, was clear. According to the Ministry of Land, Infrastructure and Transport’s Actual Transaction Disclosure System, ‘Dream Forest Lotte Castle (84㎡ exclusive area) in Mia-dong, Gangbuk-gu, Seoul was sold for 700 million won on the 23rd of last month. This price is 470 million won lower than the 1.17 billion won traded in October 2021.
In addition, Jugong 19 Complex in Chang-dong, Dobong-gu (84㎡ exclusive area) was traded in November last year for 805 million won, 435 million won lower than the highest price of 1.24 billion won in May 2021. Also, ‘Imgwang (exclusive area 122㎡)’ in Sanggye-dong, Nowon-gu was traded for 900 million won on the 18th of last month. This is 430 million won lower than the previous highest price of 1.33 billion won.
The number of apartments for sale in Seoul reaches 75,000. According to real estate big data company Asil, as of the 12th, there were a total of 74,998 apartments for sale in Seoul. It increased by 48.4% compared to the same period last year (50,513 cases). In fact, transactions are halting and listings are piling up. According to the Seoul Real Estate Information Plaza, the number of apartment transactions in December last year was counted at 1,323. After recording 1,839 cases in November last year, the number has remained below 2,000 for two consecutive months. There is still a deadline for reporting, but it is expected to be below 2,000 cases.
In the real estate market, there is an analysis that the wait-and-see attitude is intensifying due to the accumulation of fatigue caused by rising housing prices, high interest rates, loan regulations, and concerns regarding poor PF. In fact, nationwide home buying sentiment continued to decline for two consecutive months. According to the Real Estate Market Research Center of the Korea Research Institute for Human Settlements, the national housing sales market consumer sentiment index in November last year was 101.9, down 9.2 points from the previous month. This is the second consecutive month of decline since the upward trend in buying sentiment last month collapsed for the first time in 10 months.
The metropolitan area (103.0) fell 9.3 points compared to the previous month. Seoul (104.4), Incheon (101.5), and Gyeonggi (102.6) also fell by 9.3p, 7.1p, and 8.3p, respectively, compared to the previous month. Non-metropolitan areas (100.9) fell 8.8 points. Daegu (91.3) and Jeju (89.8) turned into a downward trend, and Gyeongbuk (97.6), Jeonbuk (98.6), and Busan (99.5) also saw their sentiment indices fall to the 90s.
The Korea Research Institute for Human Settlements’ consumer sentiment index is a score between 0 and 200, and when the index exceeds 100, it means that there are many responses to price increases or increased transactions. Specifically, if the index is less than 95, it is classified as a downward phase, if it is above 115, it is classified as an upward phase, and if the index is below 95 to 115, it is classified as a flat phase.
Experts predicted that without measures such as interest rate cuts, real estate transactions will remain in a wait-and-see mode this year.
Kwon Dae-jung, a professor of real estate at Sogang University Graduate School, said, “Even though the Bank of Korea decided to freeze interest rates, interest rates are already at a high level.” He added, “House purchase sentiment has decreased due to variables such as rising house prices, loan regulations, real estate PF crisis, and general elections, as well as interest rates.” “He explained.
Professor Kwon added, “If there are no measures such as interest rate cuts, the wait-and-see attitude will continue for the time being,” adding, “As transactions decrease and listings increase, housing prices will maintain a downward trend.”
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