July Seoul Housing Prices Surge... 'Panic Buying' Amid Repeated Policy Failures

Seoul Housing Up 0.71%, Apartments Up 1.12%
Highest Increase Since December Last Year
Panic Buying Impact...Mid-Low Priced Complexes Also Surge

[Asia Economy Reporters Moon Jiwon, Kim Yuri] Last month, the housing price increase rate in Seoul was found to be five times that of the previous month. Apartment prices rose at the largest rate this year. The 6.17 real estate measures as well as the 7.10 measures failed to stop the 'panic buying' phenomenon among non-homeowners.

According to the 'Nationwide Housing Price Trend Survey' released by the Korea Real Estate Board on the 3rd, Seoul housing prices in July rose by 0.71%, recording an increase rate more than five times higher than the previous month (0.13%). This is the largest increase since December last year (0.86%), when the real estate market was greatly shaken by the 12.16 measures.

Seoul apartment prices rose 1.12% compared to the previous month. This is also the largest increase in seven months since December last year (1.24%).

It is analyzed that the government's announcement of ultra-strong real estate measures such as strengthening property taxes and loan restrictions in June and July rather became a negative factor for the market. This Korea Real Estate Board survey was conducted from June 16 to July 13, reflecting the effects of both the 6.17 and 7.10 measures to some extent.

In fact, in Seoul, not only high-priced housing concentrated areas such as the Gangnam 3 districts (Gangnam, Seocho, Songpa) and Mapo, Yongsan, Seongdong districts (so-called Ma-Yong-Seong), but also mid-to-low priced apartments in outer areas such as Nowon, Dobong, Gangbuk (No-Do-Gang), and Geumcheon, Gwanak, Guro districts (Geum-Gwan-Gu) showed a rapid rise.

In Sangye-dong, Nowon-gu, Hanshin 1st Complex 53.96㎡ (exclusive area) was traded in the 280 million KRW range until January, but by the end of last month, the actual transaction price soared to 343 million KRW. The actual transaction price of Ssangyong Apartment 59.88㎡ in Chang-dong, Dobong-gu, which was 545 million KRW at the beginning of the year, also rose to 640 million KRW on July 10, the most recent transaction, increasing by nearly 100 million KRW in half a year.

The Korea Real Estate Board analyzed, "In Seoul, the increase was mainly in northern areas such as Nowon and Dobong districts, and in Gyeonggi-do and Incheon, the rise was centered on mid-to-low priced complexes with development prospects or those with smaller increases."

The market points to the increased panic buying among people in their 30s and 40s after the government's announcement as the reason for the soaring housing price increase rate in Seoul. The government's strengthening of transaction and holding taxes targeting multi-homeowners did not curb housing prices in the Gangnam area but rather raised prices even for mid-to-low priced homes, raising the threshold for home ownership.

According to the Seoul Real Estate Information Plaza, the number of apartment sales in Seoul in June was 15,589, the third highest since statistics began.

Previously, in August of the year when housing prices soared just before the 9.13 measures in 2018, the number of apartment sales in Seoul also increased significantly to 14,966. As of the morning of this day, the number of apartment sales in Seoul in July is recorded at 6,218, and it is analyzed that the total will likely exceed 10,000 by the end of this month’s tally.