The Seoul apartment sales price index continues to rise for 31 consecutive weeks. The increase has narrowed slightly. There is an analysis that it has become difficult for buyers to purchase a house in the aftermath of loan regulations. Since last month, commercial banks have been tightening their loans in earnest, but confusion has arisen over the limit reduction for even policy mortgages, and even actual consumers are struggling with uncertainty.
Minister of Land, Infrastructure and Transport Park Sang-woo said at a government audit on the 24th, “I am very sorry for the confusion and inconvenience caused to the public by regulating stepping stone loans.” The Ministry of Land, Infrastructure and Transport decided to come up with an improvement plan with a grace period, including excluding those with mechanical disabilities. We decided to differentiate between metropolitan and non-metropolitan areas. As lending policies fluctuated, the real estate market was also thrown into chaos.
House Price Talk Talk Weekly apartment sales and rent change rate / Graphics = Biz Watch
Sales index downhill from the 2nd week of September?
According to the Korea Real Estate Agency, the national weekly apartment sales price index in the third week of October (as of the 21st) maintained the level of last week (0.02%). Compared to the previous week, the increase decreased in Seoul (0.11% → 0.09%) and Gyeonggi (0.06% → 0.04%), and was the same in Incheon (0.06%).
This is the first time in 20 weeks that the increase in apartment prices in Seoul (0.09%) has fallen below 0.10% since the first week of June (0.09%). The index, which had been falling since the second week of last month (0.23%), fluctuated between being flat and rising slightly, before falling below 0.10% this week.
An official from the Real Estate Institute explained, “Demand for sales in some preferred complexes remains, but the impact of loan regulations and the gap in transaction prices between sellers and buyers continues, leading to a build-up of properties, which has dampened buying sentiment.”
Gangnam-gu‘s growth slowed from 0.27% last week to 0.23% this week. Seocho (0.18% → 0.13%) and Songpa (0.08% → 0.07%) also decreased in increase compared to the previous week. The same was true for the non-Gangnam area, including Yongsan (0.19% → 0.18%), Mapo (0.18% → 0.14%), and Gwangjin (0.15% → 0.10%). Only Seongdong (0.16% → 0.19%), Geumcheon (0.03% → 0.04%), and Gwanak (0.02% → 0.03%) showed greater increases.
In fact, recent bearish trading is often observed. The 49㎡ exclusive use of Hanyang 1 in Apgujeong-dong was contracted for 2.08 billion won, about 500 million won lower than the previous transaction (2.57 billion won).
Dogok-dong Tower Palace’s 3rd exclusive use 141㎡ unit was also traded for 3.52 billion won, down nearly 500 million won from the previous transaction (4 billion won). An 84㎡ unit dedicated to Helio City in Garak-dong was sold for 2.3 billion won, more than 100 million won less than last month’s highest price (2.435 billion won).
Soo-min Yoon, a real estate expert at NH Nonghyup Bank, said, “Buyers cannot easily enter the market due to loan regulations, so there are more sellers than buyers,” and analyzed, “It can be seen that the market has recently changed from a seller-dominant market to a buyer-dominant market.”
He added, “There is a strong perception that prices will rise again once the loan regulations are completed, so the upward trend is still maintained,” adding, “Although there are underlying expectations of an increase, the loan regulations are having a short-term impact.”
House Price Talk Talk Weekly apartment sales and rent change rate / Graphics = Biz Watch
Rent price in Seoul rising for 75th week… until when?
In the third week of October, the national weekly apartment rental price index recorded 0.05%, a decrease in increase compared to the previous week (0.06%). Seoul (0.10% → 0.09%), Gyeonggi (0.11% → 0.07%), and Incheon (0.26% → 0.22%) all slowed down compared to the previous week.
The increase in apartment rental prices in Seoul (0.09%) also fell below 0.10% for the first time in 23 weeks since the second week of May (0.07%). Although the 75th week is positive.
Gangnam (0.15% → 0.16%) was stronger than the previous week, but the rise in Seocho (0.13% → 0.12%) and Songpa (0.09% → 0.06%) weakened. The rise in rent prices in Seongdong (0.25%) was solid. On the other hand, Gwangjin (0.17% → 0.10%) and Jongno (0.14% → 0.07%) have become quiet compared to Jeonju.
Experts have judged that there are no signs of a decline in rental prices yet. Commissioner Yoon Soo-min said, “The biggest anxiety factor in the metropolitan area, especially Seoul, is that there are no issues to expect a decline in rental prices,” and added, “There may be some fluctuations due to the lack of properties for sale, but the upward trend is expected to continue.”
Ji-hae Yoon, senior researcher at Real Estate R114, said, “There are a lot of rumors that loan regulations such as DSR (total debt service ratio) may be applied to jeonse loan products,” adding, “It is time to prepare in advance for side effects such as the balloon effect in the jeonse and monthly rent market due to regulations.” I emphasized this.
