Even with President Moon stepping in to order measures,
Only asking prices rise in Gangnam's outskirts too
"(I have) no interest in additional measures. After all, housing is not being supplied in Seoul 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, last weekend saw continued rises in asking prices and a shortage of listings in major areas of Seoul. Even though the government announced plans to increase supply alongside strengthening holding and transaction taxes for 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.
◆Gangnam Homeowners Withdraw Listings Causing 'Transaction Disappearance'... Only Asking Prices Rise
Last weekend, in major areas of Seoul covered by Asia Economy, 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 buyers and strengthen burdens on speculative homeowners such as multi-homeowners," and additional measures are expected as early as this week. However, the market shows no signs of the housing price rise slowing down. The typical phenomenon of listings drying up during a price increase period seems 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 these four neighborhoods. All involved land shares of 18㎡ or less, exempting them 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 on."
The price increase is spreading even to newly built large complexes where listings are relatively abundant. Apartments in the Goduk-dong area of Gangdong-gu, recently occupied, are hard to find below 1.5 billion KRW for 84㎡ units. Listings that remained have rapidly sold out over the weekend, pushing asking prices up. As inquiries from agencies trying to secure listings increase, homeowners are competitively raising prices in anticipation of further rises, according to agency sources. 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 newly built large complexes usually favor buyers, this is unusual."
In Daechi-dong, Gangnam-gu, known as the 'number one school district,' the feared shortage of jeonse (long-term lease) is beginning to materialize. An official from real estate agency D near Eunma Apartments in Daechi-dong said, "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," expressing concern that the jeonse shortage will soon intensify. He added, "Many homeowners are also trying to convert existing jeonse listings into half-jeonse, which will increase the burden on tenants."
◆Even Nodobang... 27 of 83 Apartment Transactions Registered on July 3 in Nowon-gu Were Record Highs
Even apartments in Seoul's outskirts such as Nowon, Dobong, and Gangbuk-gu (collectively called Nodobang) are seeing a surge in record-high prices amid strong buying demand. Although late, most buyers are chasing purchases to buy before prices rise further. Local real estate circles even describe this as a 'rage buying' reflecting disappointment with government policies.
According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system, out of 83 apartment transactions registered in Nowon-gu on the 3rd, a remarkable 27 were record highs. On the 26th of last month, a 59㎡ unit in Jugong Complex 11 in Sanggye-dong surpassed the previous transaction price of 468 million KRW to reach 500 million KRW. Nearby, a 84㎡ unit in Beacon Dream Hill Complex 3 changed hands at a record 700 million KRW on the 25th of last month, breaking the previous 570 million KRW price by 130 million KRW. A 75㎡ unit in Geonyeong 2nd Complex in Junggye-dong was traded for 620 million KRW on the 19th of last month, exceeding the previous 570 million KRW transaction price. An official from real estate agency E in the area said, "The situation in this market has not changed even after President Moon's remarks," adding, "Some even say that the 59㎡ unit in Complex 3, currently around 760 million KRW, could rise to 900 million KRW by the end of the administration."
Locally, there is speculation that Nowon-gu, densely populated with mid- to low-priced apartments, will lead the price rise in the northern part of Seoul, which was previously driven by Mapo, Yongsan, Seongdong-gu (called Mayongseong), and Gwangjin-gu. An official from real estate agency F in Hagye-dong hinted, "Recently, asking prices have been rising more steeply," adding, "Listings are so scarce that complexes with double-digit listings are rare."
According to the Korea Real Estate Board, as of the 29th of last month, the weekly apartment price increase rate in most northern Seoul areas rose compared to the previous week. The northeastern area including Nodobang rose from 0.06% to 0.07%, and the northwestern area including Eunpyeong and Seodaemun-gu also increased from 0.04% to 0.06%. The southwestern area including Geumcheon, Gwanak, and Guro-gu (Geumgwan-gu) saw a slight decrease from 0.08% the previous week but maintained a high level at 0.07%. An official from real estate agency G in Doksan-dong, Geumcheon-gu said, "Recently, there have been cases where sellers cancel contracts by paying double the deposit," adding, "Unsold properties are being withdrawn or asking prices are being raised significantly with the mindset of waiting if not in a hurry."
An industry insider diagnosed, "Although the government says it will expand supply, the market has already learned through experience that there is no alternative market to replace Seoul," adding, "Unless a revolutionary plan to drastically increase supply in Seoul emerges, the effectiveness of measures will inevitably be limited."
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