The national apartment weekly price index, which had been rising steeply, hit the brakes for the first time in five months. This is because while the local real estate market is falling, the psychology of buyers has frozen due to loan regulations, and real estate in the metropolitan area is also showing a strong decline.
Apartment prices in Seoul are maintaining an upward trend, but the rate of increase has decreased significantly compared to before. The increase rate, which once rose to 0.30%, appears to have calmed down to 0.06%. Consumers are turning their eyes from the sales market to the rental market, but they are all subject to lending regulations.
House Price Talk Talk Weekly Apartment Sales Price Change Rate / Graphics = Biz Watch
“Are you willing to pay for it? We also collect the loans you took out.”
According to the Korea Real Estate Agency, weekly apartment sales prices nationwide in the second week of November (as of the 11th) were flat compared to the previous week (0.01%). It appears that the upward trend has stopped for the first time in 22 weeks since the second week of June (0.00%). The increase in Seoul (0.07% → 0.06%), Gyeonggi (0.04% → 0.02%), and Incheon (0.02% → 0.00%) all decreased.
In the case of Seoul (0.06%), it recorded the lowest increase rate in 24 weeks since the fourth week of May (0.06%). If you recall that it rose to 0.30% in July, the excitement seems to have subsided. 15 of Seoul’s 25 autonomous districts fell below the average rate of increase.
Only Gangnam (0.19%), Seocho (0.11%), and Yongsan (0.10%) are hot. In Songpa (0.04%), Gangdong (0.02%), and Guro (0.01%), the increase decreased compared to the previous week.
In fact, the 84㎡ exclusive use of Park Rio in Songpa-gu was traded at 2.35 billion won (34th floor) on the 2nd, 220 million won lower than the highest price (2.57 billion won, 23rd floor). The exclusive 84㎡ unit in Myeongil Jungang Heights, Gangdong-gu, also changed hands for 860 million won (3rd floor), 70 million won lower than the previous transaction (930 million won, 1st floor).
An official from the Korea Real Estate Board analyzed, “Demand is steady in preferred complexes, such as complexes undergoing reconstruction, with rising transaction reports,” but “other complexes show mixed trends, with transactions stagnating due to decreased buying sentiment due to loan regulations.”
Prospective buyers are sighing deeper due to continued lending regulations since September. When the stepping stone loan limit is reduced from the 2nd of next month, apartments on the outskirts of the metropolitan area worth 500 to 600 million won are expected to be particularly hit. Seoul is no exception to the aftermath of the tightening of loans that has spread throughout the financial industry.
A bank in Gwangjin-gu said, “All banks are subject to government regulations on household loans, so they are making new home mortgage loans conservatively,” and added, “Rather than issuing new loans, they are repaying existing loans.” Another bank official said, “Other banks are no longer accepting home mortgage loans or have raised their interest rates, so there has been a huge influx of them towards us,” adding, “There are thousands of applications piled up, so even if you apply now, it will take more than a month.”
The decline in buying sentiment can also be confirmed in the supply and demand index. The Seoul apartment sales supply and demand index for the second week of November announced by the Real Estate Institute was 100.3, down 0.1 point from the previous week. It has been falling for four consecutive weeks since the third week of October. When this index falls below 100, it means that there are more people trying to sell their homes.
As prospective buyers took a wait-and-see approach, apartment transaction volume also fell. According to Real Estate Planet, a real estate information company, the nationwide apartment transaction volume in September was 29,545, a 31.1% decrease from the previous month and the lowest this year. Seoul apartment transaction volume (2,896 cases) decreased by 53.2% in one month, ranking first in the rate of decline. Gyeonggi (7,608 cases) and Incheon (1,762 cases) followed with -41% and -39.3%.
Jeong Soo-min, CEO of Real Estate Planet, predicted, “The market has shrunk due to the government’s strengthening of loan regulations and economic uncertainty has increased, resulting in a decline in apartment transactions, which had driven the market up until now,” and predicted, “As long as the policy stance is maintained, this situation is expected to continue for the time being.”
House Price Talk Talk Weekly apartment rent change rate / Graphics = Bizwatch
Deposit loan is also difficult… Kangbohap continues
The national weekly apartment rental price index remained at the previous week’s level (0.04%). The increase decreased in Seoul (0.06% → 0.05%) and Incheon (0.14% → 0.11%), but increased slightly in Gyeonggi (0.06% → 0.07%).
In the case of Seoul (0.05%), it is the lowest level in 37 weeks since the fourth week of February (0.05%). 11 out of 25 autonomous districts fell below the average rate of increase. Songpa (-0.07%), Gangdong (-0.05%), and Guro (-0.02%) showed a downward trend.
An official from the Real Estate Institute analyzed, “The demand for rentals in preferred complexes is steady, so rent prices are continuing to rise,” but “the overall increase in Seoul has decreased slightly due to the impact of the increase in market loan interest rates and downward transactions in some complexes.”
The impact of lending regulations still remains in the jeonse market. According to Real Estate R114, a real estate information company, rental prices in the metropolitan area are showing limited movement at the level of the strong minimum. Banks are evaluating the terms and conditions of individual borrowers more stringently than in the past when it comes to deposit loans for jeonse deposits, which is leading to a decrease in liquidity.
Ji-hae Yoon, senior researcher at Real Estate R114, said, “Despite the contraction in the sales market, demand is not naturally distributed through the supply of new construction.” He added, “There are signs that the volume of jeonse transactions will increase as demand with no place to go is shifting to rental cars, which are substitutes.” i did it.
Jinsu Kim (jskim@bizwatch.co.kr)
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