Seoul Metropolitan Area Transaction Volume Also Increased by 140% During the Same Period
Market Volatility Rises Before and After the December 16 Real Estate Measures
[Asia Economy Reporter Moon Jiwon] In December last year, the volume of housing sales transactions in Seoul surged by more than 216% compared to the same month the previous year. The transaction volume in the metropolitan area also increased by 140% during the same period. Analysts suggest that the unusually large market fluctuations before and after the December 16 real estate measures likely triggered a series of sales and purchases.
According to the Ministry of Land, Infrastructure and Transport on the 23rd, the nationwide annual housing sales transaction volume last year was 805,000 cases, a 6% decrease compared to 856,000 cases the previous year.
The annual transaction volume showed a continuous decline after rising from 1,005,000 cases in 2014 to 1,194,000 cases in 2015, then dropping to 1,053,000 cases in 2016, 947,000 cases in 2017, and 856,000 cases in 2018. Last year's transaction volume was 20.4% lower compared to the recent 5-year average (1,011,000 cases).
However, the nationwide housing sales transaction volume in December last year was 118,000 cases, which represents an increase of 112.7% and 49.9% compared to the same month the previous year (56,000 cases) and the 5-year average (79,000 cases), respectively.
In particular, the transaction volume in the metropolitan area in December last year (62,000 cases) increased by 140.0% compared to the same month the previous year, and the volume in Seoul (22,000 cases) rose by a remarkable 216%.
By housing type, transactions were concentrated mainly on apartments. Apartment transactions in December last year reached 88,000 cases, up 161.8% compared to the same month the previous year, while multi-family and row houses (19,000 cases) increased by 44.6%, and detached and multi-household houses (11,000 cases) rose by 28.1% respectively.
Considering that the nationwide transaction volume for apartments (545,000 cases), multi-family and row houses (155,000 cases), and detached and multi-household houses (105,000 cases) all decreased last year, it indicates that buying demand was concentrated in December.
The unusually high transaction volume in December is interpreted to have been influenced significantly by government regulations as well as moves related to moving ahead of the new school term.
In December last year, the government introduced the December 16 measures, regarded as the strongest real estate regulations ever. The measures included ▲strengthening loan-to-value (LTV) limits on mortgage loans for houses priced over 900 million KRW ▲prohibition of mortgage loans for purchasing ultra-high-end apartments priced over 1.5 billion KRW ▲strengthening debt service ratio (DSR) management ▲tightening real demand requirements for mortgage loans.
As regulations focused on houses priced over 1.5 billion KRW, the real estate markets in Seoul’s Gangnam area, Mapo, and Yongsan fluctuated. Expectations grew that apartment prices under 900 million KRW in areas like Nowon, Dobong, Gangbuk, Geumcheon, and Gwanak-gu, which escaped the regulations due to the 'balloon effect,' would rise, leading to concentrated buying demand.
An industry insider said, "The real estate market was greatly shaken by various regulations, so the transaction volume seems to have increased somewhat. However, since the government has stated it will introduce additional measures if the market does not stabilize, it is likely that a wait-and-see stance will continue going forward."
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