Rising Construction Costs Impacting Housing Market: Analysis of Favored Cities for Rebuilding

Delivery time2024-05-05 06:33

“New construction… favored cities for rebuilding due to rapidly rising construction costs and larger grants.”

(Seoul = Yonhap News) Reporter Kim Hee-seon = While apartment prices in Seoul, which had been falling since last December, have recently rebounded, house prices have which was built 20 years after the completion shows weakness.

According to the Korea Real Estate Board’s apartment sales price index by age on the 5th, apartments in Seoul built less than 20 years ago managed to rebound in price last March, but apartments that were over 20 years old could not escape​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​a move in March.

In the Seoul area, the sales price index for apartments built less than 5 years ago and for apartments built between 5 and 10 years increased by 0.03% in March compared to the previous month, and for apartments built between 10 and 15 years old, it is. an increase of 0.06% and between 15 and 20 years apartments below rose by 0.07%.

However, for apartments older than 20 years, the index fell by 0.08% compared to the previous month, continuing a downward trend for four consecutive months since last December.

Among apartments older than 20 years, the decline was in the northeast region, which includes the so-called ‘No-Do-Gang’ areas such as Noon, Dobong, and Gangbuk-gu, at the most at -0.13%.

In addition, the northwest region (-0.05%) where Mapo, Seodaemun, and Eunpyeong-gu are located, the southwest region (-0.05%) where Yeongdeungpo, Yangcheon, Dongjak, and Gangseo-gu located, in addition to the southeast. area where the three Gangnam districts (Gangnam, Seocho, and Songpa) are located (-0.05%) Apartments built 20 years ago in all districts failed to move down (0.03%).

From December last year, when apartment prices were generally falling, to February this year, prices for properties built more than 20 years ago were particularly weak.

The decline in apartments in Seoul over 20 years old was -0.16% in December last year, -0.21% in January this year, and -0.18% in February, which was the largest according to age.

Since April, apartments built more than 20 years ago have stopped the decline and started to go back, but the rate of increase is only at the lowest level.

The weekly sales price index change rate for Seoul apartments over 20 years from the first week to the fifth week of April was 0.01%, 0.01%, 0.02%, 0.02%, and 0.02%, showing the smallest increase by age group.

This compares to the rate of change of 0.03 to 0.09% for new apartments less than 5 years old, and the rate of change of 0.05 to 0.08% for apartments built over 5 to less than 10 years year.

Prices for apartments built more than 20 years after completion appear to be particularly weak due to a stronger preference among buyers for new construction and lower expectations for rebuilding apartments.

In recent years, as construction costs have risen due to rising nuclear ash prices, the share of costs that apartment owners have to rebuild has increased, and the number of reconstruction centers that have problems in carrying out projects due to conflicts with construction companies over construction costs is increasing.

It does not seem that the various rebuilding deregulation policies announced by the government this year are having a positive effect on rebuilding house prices.

A business official said, “While the preference for new apartments with various community amenities is becoming stronger, lower expectations for rebuilding are also reflected in market prices,” adding, “It is inter- different from the past when apartment reconstruction brought the overall increase in apartment prices. “It looks different,” he said.

hisunny@yna.co.kr

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2024/05/05 06:33 Posted