Multiple Homeowners and Registered Rental Housing Supply Flooding... Seoul Housing Prices 'Tug of War'

Confusing Seoul Real Estate Market
Increased Pressure on Multi-Homeowners and Corporations Leads to Rising Quick Sales
Automatically Deregistered Rental Housing Expected to Enter Market
However, Record-High Prices Continue in Many Areas
Tight Tug-of-War Between Sellers and Buyers

View of the apartment complexes in the Yongsan area as seen from the 63 Observatory in Yeouido, Seoul. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Moon Jiwon] The number of quick-sale listings with reduced prices is gradually increasing across apartment complexes in Seoul. This is interpreted as a result of significantly weakened buying demand following the government's strengthened tax burden on multi-homeowners and expanded supply policies. In fact, some complexes are seeing transactions at prices several tens of millions of won lower than previous high prices. However, there are still many complexes hitting record prices, making it difficult to predict the future mood of the Seoul real estate market.

According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system on the 13th, a 130.93㎡ Hyundai apartment in Ogeum-dong, Songpa-gu, Seoul, was traded for 1.45 billion won (11th floor) on the 14th of last month, which is 260 million won lower than the real transaction price of 1.71 billion won on the 10th of the same month. Except for a 3rd-floor unit traded at 1.45 billion won in June, this size has mostly been traded in the 1.5 billion won range this year, indicating a clear price drop.

A 84.64㎡ Wolgok Doosan We've apartment in Hawolgok-dong, Seongbuk-gu, was traded for 700 million won on the 7th, down 60 million won from the real transaction price of 760 million won on the 4th of last month. This size surpassed 700 million won in March and had maintained an upward trend since then. Although apartment prices vary depending on floor, building, and occupancy status, making comparisons difficult, the industry explains that quick-sale listings are emerging across Seoul, signaling a price adjustment phase.

According to the Seoul Real Estate Information Plaza, the total number of apartment transactions in Seoul last month was 3,992, which is about a quarter of the 10,647 transactions in the previous month. Although the 30-day reporting period is still ongoing, the large decline suggests that the drop in transaction volume will be significant. A 84.34㎡ Hyundai apartment in Seocho-dong, Seocho-gu, was traded for 1.46 billion won (4th floor) on July 4th, rose to 1.498 billion won (5th floor) on the 17th of last month, but then slightly dropped to 1.48 billion won (2nd floor) on the 5th.

Since the government raised the comprehensive real estate tax rates for multi-homeowners and corporations through the July 10th measures, the volume of listings is expected to gradually increase ahead of the property tax imposition date in June next year. Additionally, it is analyzed that the downward pressure on house prices may intensify as a significant portion of the 468,000 registered rental housing units, which will be automatically deregistered by the end of the year, are expected to be released into the market.

Earlier, Deputy Prime Minister and Minister of Strategy and Finance Hong Nam-ki stated at the 6th Real Estate Market Inspection Ministerial Meeting on the 8th, "468,000 registered rental housing units are scheduled to be automatically deregistered by the end of the year," adding, "A significant portion of these may be supplied as listings in the market." According to the industry, about 80,000 of these units are in the Seoul metropolitan area, and landlords are likely to list them by the first half of next year to minimize capital gains and comprehensive real estate tax burdens.

According to the weekly apartment price trend survey released by KB Kookmin Bank, the Seoul apartment buyer dominance index recorded 96.2 this week, falling below 100 for the first time in 13 weeks since the second week of June. This means there are more sellers than buyers. Minister of Land, Infrastructure and Transport Kim Hyun-mi said on a radio broadcast on the 9th that the volume of listings from corporations and multi-homeowners increased by 30%, while the volume of buyers decreased by 30%.

However, there are still many Seoul apartment complexes hitting record prices. A 84.79㎡ Parkrio apartment in Sincheon-dong, Songpa-gu, was traded in the 1.8 billion won range until early July but was traded for 2.05 billion won on the 19th of last month, with current asking prices forming in the high 1.9 billion to low 2 billion won range. A 59.99㎡ Doosan We've apartment in Haengdang-dong, Seongdong-gu, was traded for 1.18 billion won on the 1st, more than 100 million won higher than the 1.045 billion won real transaction price on June 27th.