Seoul Apartment Transactions Plummet 30% in April Due to Loan Regulations and COVID-19 Restrictions

April transaction volume 3,008 cases... 31.8% decrease compared to March's 4,411 cases

Apartment view in the Gangnam 3 districts [Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] The volume of apartment transactions in Seoul in April sharply declined by more than 30% compared to March, due to tightened loan regulations and the impact of the novel coronavirus disease (COVID-19). Following a halving of transaction volume in March compared to February, the market saw a significant decrease for two consecutive months.

According to the Seoul Real Estate Information Plaza on the 31st, the number of reported apartment transactions in Seoul last month (based on actual contracts) was 3,008. This represents a 31.8% decrease from 4,411 transactions in the previous month. Since February 21, the reporting period for actual transactions was shortened from 60 days to 30 days, so all contracts made in April were reflected in this statistic.

Seoul apartment transaction volumes surged explosively to over 11,000 in both November and December last year due to market overheating, but plummeted to 6,474 in January this year following the announcement of the December 16 real estate measures. The volume then unexpectedly rose to 8,279 in February, before halving to 4,411 in March and falling further to 3,008 in April.

Experts attribute the temporary increase in February transactions to the December 16 measures, which led to rapid sales of ultra-high-end homes priced above 1.5 billion KRW and continued demand for mid- to low-priced homes under 900 million KRW outside the Gangnam area. However, they see the subsequent decline as a result of tightened loan regulations and the economic downturn caused by COVID-19, which dampened buyer demand.

Recently, the housing market has seen most ultra-low-priced properties aimed at tax savings?avoiding capital gains tax surcharges or property taxes?being sold off, leading to price increases and a lack of transactions. For example, in the representative Gangnam redevelopment complex, Eonma Apartment in Daechi-dong, Gangnam-gu, 76㎡ units (exclusive area) traded last month between 1.745 billion and 1.84 billion KRW, while this month actual transaction prices ranged from 1.766 billion to 1.87 billion KRW, reflecting a price increase of about 20 to 30 million KRW.

Meanwhile, apartment transaction volumes in Gyeonggi Province in April also dropped to about one-quarter of March’s level. According to the Gyeonggi Real Estate Portal, last month’s apartment transactions in Gyeonggi totaled 12,328, a 25.1% decrease from 16,450 in the previous month. Areas that experienced intense 'balloon effects' until early this year, such as 'Suyongseong' (Suwon, Yongin, Seongnam), as well as Uiwang and Anyang cities, which were designated as regulated areas under the February 21 measures, saw transaction volumes decline by nearly 20%.