Prolonged Buyer-Seller Standoff... Housing Price Uptrend Remains Intact

Real Estate 114, Apartment Price Trends in the Seoul Metropolitan Area for the Fourth Week of February

[Asia Economy Reporter Kim Hyemin] Since the announcement of the 2·4 supply measures, a standoff has continued between apartment buyers and sellers. As some of the demand side turned cautious, the apartment sale prices in Seoul in the last week of February recorded the same rate of increase as the previous week. However, with homeowners maintaining their asking prices, the upward trend seems to be continuing.

According to Real Estate 114 on the 27th, the apartment sale prices in Seoul in the fourth week of February rose by 0.14% compared to the previous week, showing the same rate of increase as the previous week. General apartments rose by 0.13%, while redevelopment apartments increased by as much as 0.22%. Real Estate 114 said, "Redevelopment apartments saw an expanded rate of increase as major complexes in the Gangnam area accelerated their projects to avoid the two-year actual residence obligation regulation amid expectations of regulatory easing."

In Seoul, mid-to-low priced apartments are still leading the upward trend. By region, the areas that exceeded the average increase were ▲Songpa (0.3%) ▲Guro (0.28%) ▲Nowon (0.26%) ▲Dobong (0.26%) ▲Dongjak (0.21%) ▲Gangdong (0.19%) ▲Geumcheon (0.18%). Price increases in redevelopment complexes in the Gangnam area were also notable. Complexes around Apgujeong rushed to obtain approval for association establishment, and due to redevelopment expectations, Apgujeong-dong’s Shinhyundai and Guhyeondae 1st and 2nd complexes rose by 25 million KRW to up to 100 million KRW.

New towns rose by 0.12% compared to the previous week. With the basic plan for the Wirye Line tram approved and announced, Wirye recorded the highest increase at 0.23%. Following were ▲Pyeongchon (0.22%) ▲Dongtan (0.2%) ▲Jungdong (0.17%) ▲Ilsan (0.14%) in order.

Gyeonggi and Incheon rose by 0.15% compared to the previous week. The northern Gyeonggi area, where the Great Train Express (GTX) line is planned, showed an upward trend. By region, the increases were ▲Uijeongbu (0.3%) ▲Paju (0.27%) ▲Uiwang (0.26%) ▲Yangju (0.25%) ▲Anseong (0.23%).

The Seoul jeonse (long-term lease) market rose by 0.13% compared to the previous week, but the rate of increase has slowed since early January. As demand slowed, the rate of increase shrank in 11 out of 25 districts compared to the previous week. By region, the highest increases were ▲Guro (0.27%) ▲Songpa (0.25%) ▲Jongno (0.23%) ▲Nowon (0.22%), and the lowest were ▲Gangdong (0.12%) ▲Yangcheon (0.15%) ▲Dobong (0.15%).

New towns rose by 0.08% compared to the previous week, and Gyeonggi·Incheon rose by 0.11%.

Yeo Kyung-hee, senior researcher at Real Estate 114, said, "Following the 2·4 supply measures and the announcement of new measures, the government has continuously sent signals about housing supply, creating an atmosphere of cautious observation in the metropolitan apartment market." She added, "Although large-scale supply is scheduled and the anxiety of the demand side is expected to ease somewhat, considering the time lag until supply, it is difficult to expect immediate stabilization of the housing market."

She continued, "Rather, as prices of redevelopment complexes that are accelerating their projects rise, it may exert upward pressure on nearby apartment prices."

Regarding the jeonse market, she said, "Due to the burden of rapid price increases, the Lunar New Year holiday, and COVID-19, demand has slowed. The overall shortage of listings remains, and with an increase in homeowners moving in due to capital gains tax exemptions and loan regulations, there will not be many jeonse units released from move-in apartments."

Senior researcher Yeo particularly noted, "After March, when the full-fledged spring moving season begins, listings will be depleted, and instability in the jeonse market will continue. Especially in Gwangmyeong and Siheung, which were announced as new housing sites, jeonse prices are expected to strengthen due to subscription waiting demand."