President Moon Orders Measures, but "Prices Rise Even in Gangnam's Outskirts"

Weekend Market Sentiment in Major Seoul Areas
Landlords Withdraw Listings, 'Transactions Disappear'
Typical House Price Rise Pattern D?j? Vu

On the 6th, a real estate agency office in Seoul / Photo by Hyunmin Kim kimhyun81@

"I'm not interested in (additional measures). After all, housing supply in Seoul is not happening anyway... Rather, homeowners are withdrawing listings, causing asking prices to rise." (An official from real estate agency A in Jamsil-dong, Seoul)

Despite President Moon Jae-in personally ordering the preparation of strong additional real estate measures, asking prices continued to rise and listings remained scarce in major areas of Seoul over the past weekend. Although the government announced plans to increase supply alongside strengthening holding and transaction tax burdens on multi-homeowners, not only the Gangnam area but also the outskirts densely populated with mid-to-low priced housing were simultaneously stirred, spreading anxiety about housing prices.

In major Seoul areas covered by Asia Economy last weekend, not only did apartment asking prices continue to rise, but homeowners were also withdrawing listings, resulting in very few properties available. On the 2nd, President Moon instructed Minister of Land, Infrastructure and Transport Kim Hyun-mi to "prepare support measures for actual homebuyers and strengthen burdens on speculative homeowners such as multi-homeowners," and additional measures are expected as early as this week. However, the market showed no signs of the housing price rise slowing down. The typical phenomenon of listing withdrawal during a housing price surge seemed to be intensifying.

In Jamsil-dong, Songpa-gu, designated as a land transaction permission zone, transactions have stopped while asking prices continue to rise. An official from real estate agency A in Jamsil-dong said, "You can say transactions have stopped." According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system, since the land transaction permission system was implemented on the 23rd of last month, only four apartment transaction reports have been filed in Jamsil-dong, Gangnam-gu's Samseong-dong, Daechi-dong, and Cheongdam-dong. All involved land shares of 18㎡ or less, which are exempt from permission. However, the transaction permission system has not restrained prices at all. An official from real estate agency B in Jamsil-dong said, "Asking prices have actually risen," adding, "Most sellers believe that since positive factors are certain, if they are not in a hurry, it's better to hold out."

Price increases have spread to relatively abundant new large apartment complexes as well. Apartments in the Goduk-dong area of Gangdong-gu, recently occupied, are hard to find listed below 1.5 billion KRW for 84㎡ units. Listings that remained have rapidly been depleted over the weekend, causing asking prices to rise.

As listings that remained have rapidly been depleted over the weekend, asking prices have risen. With inquiries from brokerage offices trying to secure listings increasing, homeowners are competitively raising prices fueled by expectations of further increases, according to brokerage offices. An official from real estate agency C in this area explained, "Sellers are asking up to 1.65 billion KRW for immediately available units," adding, "Considering that new large apartment complexes generally favor buyers, this is unusual."

In Daechi-dong, Gangnam-gu, known as the 'number one school district,' the feared jeonse (long-term deposit lease) shortage is beginning to materialize. An official from real estate agency D near Eunma Apartments in Daechi-dong expressed concern, saying, "Many homeowners who have not completed two years of actual residence seem to be planning to evict tenants and register their residence themselves once existing contracts expire," adding, "The jeonse shortage seems likely to intensify soon." He also added, "Many homeowners are trying to convert the few jeonse listings into half-jeonse, which will increase the burden on tenants."