‘Deal Drop’ Seoul apartment prices have really fallen… Where is the biggest drop?

September Seoul Real Transaction Price Index -0.01%
Declining buying sentiment due to lending regulations, etc.

Due to the impact of lending regulations, the Seoul apartment actual transaction price index fell for the first time this year.

Apartment seen from Yongsan-gu, Seoul

According to the apartment actual transaction price index announced by the Korea Real Estate Board on the 17th, the Seoul apartment actual transaction price index decreased by 0.01% in September. It is the first time in nine months that the monthly Seoul apartment actual transaction price index has fallen since December last year (-1.19%). This is the first downward turn this year.

Unlike market-centered price trend research, the actual transaction price index is an index that compares actual traded and reported prices with previous transaction prices. Although recent market transactions can reflect changes relatively accurately, there are limits to accuracy when trading volume is low or abnormal transactions are included.

Analysis suggests that the decline in the actual apartment price index in Seoul is largely due to the authorities’ efforts to tighten money in the market, such as by introducing new lending regulations starting last September. It is said that the implementation of the second stage stress DSR (Debt Service Ratio) since last September, and the fact that commercial banks have raised loan interest rates and restricted loans to existing homeowners in the name of household debt management, has had an impact on the decline in the actual transaction price index. .

According to the Seoul Real Estate Information Plaza, the volume of apartment transactions in Seoul reached 9,181 in July this year (based on contract date) and 6,474 in August, but fell by half to 3,089 in September when loan regulations began in earnest. Transaction volume in October was 3,254 as of the survey on the 17th, a slight increase from September, but sluggish transactions are still continuing.

It is analyzed that buying sentiment has weakened as lending regulations have been strengthened while fatigue with price rises has increased with the number of new complexes reporting in some areas, including the Gangnam area.

By region, the northwest region, which includes Eunpyeong, Seodaemun, and Mapo, had the largest decline, down 0.90%. The northeastern region, where the Nodogang River (Nowon, Dobong, Gangbuk-gu) is located, also fell by 0.42%. On the other hand, the southeastern region, which includes the four Gangnam districts (Gangnam, Seocho, Songpa, and Gangdong-gu), continued its upward trend with an increase of 0.86%. The southwestern region (Gangseo, Yangcheon, Yeongdeungpo, Dongjak-gu, etc.) and the urban area (Jongno, Yongsan, Jung-gu) where there are reconstruction issues also rose by 0.3% and 0.1%, respectively.

In September, Gyeonggi-do’s actual transaction price index was flat (0.00%), and Incheon’s rose 0.04%. The overall index in the metropolitan area was flat (0.00%). On the other hand, the local apartment actual transaction price index rose 0.2%. Due to this effect, the national apartment actual transaction price index rose by 0.09%, but the rate of increase slowed significantly compared to August (0.67%).

Seoul’s actual transaction price index is expected to decline in October as well. The provisional actual transaction price index for October, calculated from sales contracts reported by the end of last month, was expected to decline by 0.36% in Seoul and 0.06% nationwide.

Reporter Kim Hyun-jeong kimhj2023@asiae.co.kr

‍ As the website editor for world-today-news.com, I would like to‍ conduct an interview with two guests about the decline in Seoul’s housing prices in the wake of​ the‍ new lending regulations.

Transcript:

Host: Good morning to⁣ both of ‌our esteemed⁢ guests. Thank you for joining us ‌today to discuss the recent decline in Seoul’s housing prices. Our first question is‌ for you, Mr. Kim. As the Korea Real Estate Board’s data indicates, the Seoul⁢ apartment actual transaction price index fell for the first ⁢time this year in September. In your opinion, what are the key factors behind this decline? How significant are the new lending regulations in this regard?

Mr. Kim: Thank you for having me.​ Yes, it’s true that the decline in Seoul’s housing prices can be attributed to multiple factors. The implementation ⁣of new lending regulations was ⁣definitely one⁤ of them. In September, the second stage of Debt Service ⁣Ratio (DSR) restrictions came into‍ effect, making it harder for existing homeowners to‌ obtain loans. This increased the financial burden on‍ potential buyers, which led to a drop in demand. Additionally,‍ commercial banks have been ⁤raising interest rates and restricting loans, further impacting buyer sentiment. Other factors ​such as the ‍slowdown in the⁢ overall economy and the​ oversupply of housing⁣ units in certain areas also played a‍ role in⁤ the decline.

Host: That’s a very insightful perspective. Thank you. Let’s go to you, Ms. Park. How do you think new lending regulations have impacted the affordability of⁢ housing in Seoul? Do ⁤you see this as⁣ a ⁤short-term correction or ‍a sign ​of things to come?

Ms. Park: Hello‌ everyone. The new lending regulations have certainly ​made it more challenging ⁤for⁤ potential⁤ homebuyers ⁤to secure loans, ​especially⁣ those who already have high ‍levels of debt. However, it’s important to note that these regulations ⁤were introduced⁣ to⁢ promote ‍financial stability‍ and prevent excessive borrowing. In the long run, they could actually benefit both buyers and sellers by ‍ensuring that housing prices remain sustainable. As for the current ‌situation, it’s hard to say if ⁤this is a ​short-term correction or ⁣the start of a downward trend. It​ will depend on how soon demand pick