44% of 'Transaction Cancellations' in Seoul Are at Record High Prices... Price Manipulation?

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hye-min] Cases are emerging where apartment market prices are disrupted by canceling contracts a month after trading at 'record high prices'.

In Seoul, which led the rise in housing prices, about half of the apartments with canceled sales contracts in the past two months were at 'record high prices'. This has raised suspicions that some are exploiting the fact that actual apartment transaction prices are publicly disclosed to deceive the market into thinking apartments were traded at much higher prices than before, thereby inflating housing prices.

According to real estate information company Disco on the 12th, among 129,804 apartment sales nationwide registered in the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system in December last year and January this year, 3,279 cases (2.5%) were canceled transactions.

From the 1st of this month, the government has started indicating and publicly disclosing the cancellation date when a sales contract is registered and then canceled, to prevent false contracts aimed at raising housing prices. This measure was taken amid concerns that registering record high contracts could form market prices and induce transactions at slightly lower amounts, thereby disrupting the market.

Disco's investigation revealed that the proportion of canceled transactions at 'record high prices' was particularly high in Seoul and Sejong, where apartment prices rose significantly last year.

In Seoul, there were 138 canceled sales transactions, of which 61 were record high price transactions, accounting for 44.2% of the total. In Sejong, 10 out of 20 canceled transactions were record high price deals.

For example, in Saerom-dong, Sejong City, Saeteum Village Complex 11 (The Sharp Hillstate), a 98㎡ unit signed a sales contract at a record high price of 1.41 billion KRW (14th floor) on the 15th of last month, but the registration was canceled three days later on the 18th.

In Seoul's Seongdong-gu, 83.3% of canceled transactions were record high price deals. In Kumho-dong 2-ga, Seongdong-gu, Shingumho Park Xi (84.98㎡), a sale registered on December 9 last year at 1.68 billion KRW (12th floor) was canceled 20 days later.

The cancellation rates were also high in Jung-gu (75%), Gwanak-gu (71.4%), Mapo-gu (66.7%), and Yeongdeungpo-gu (66.7%).

Kim Tae-hoon, head of Disco's data research team, said, "Not all canceled record high transactions were intentionally made to inflate asking prices, but considering that actual transaction prices act as a barometer for judging market prices, it cannot be denied that canceled record high sales affected subsequent sales prices."

He added, "Apartment prices vary even within the same complex and floor area depending on the complex, floor, sunlight exposure, and tenant status. In areas with higher speculative risk like Seoul, if there are transactions that have risen sharply compared to other actual transaction prices, it is important to investigate the reasons and determine whether they are false listings."