[Fact Check] Is the Blue House's Claim That the Increase Rate of Housing Sale Prices Is Falling True?

Lee Hoseung, Chief of the Blue House Policy Office, "Stable Outlook from Mid-February" "Housing Price Growth Rate Declines"
Korea Real Estate Board, Apartment Price Trends... Slight Decline in Seoul's Growth Rate, Nationwide Rate Maintained

[Asia Economy Reporter Ryu Jeong-min] “The rate of increase in housing sale prices and jeonse prices is declining.” Lee Ho-seung, Chief of the Blue House Policy Office, explained during a Q&A session at the Chuncheon Press Center briefing on the 1st, “Since mid-February, we have been seeing quite stable trends.”

Is the rate of increase in housing sale prices actually falling since mid-February, as the Blue House explained? Housing prices vary depending on the survey institution, target area, and announcement timing.

Reliable data from credible institutions is necessary to observe market trends. The data most closely watched by real estate policy authorities and the market is the Korea Real Estate Board’s “National Housing Price Trend Survey.”

In particular, the Korea Real Estate Board releases a weekly “Weekly Apartment Price Trend.” The rate of change in the apartment sale price index is the most closely watched figure among the data published by the Korea Real Estate Board.

[Image source=Yonhap News]

The most recent data release from the Korea Real Estate Board was on April 1st, the same day as Lee Ho-seung’s Blue House announcement.

The Korea Real Estate Board explained, “As of the 5th week of March 2021 (based on March 29), the nationwide weekly apartment price trend survey showed a 0.24% increase in sale prices and a 0.14% increase in jeonse prices.”

The nationwide apartment sale price change rate has shown little change from mid-February to the most recent announcement date (March 29). The Korea Real Estate Board stated, “The nationwide weekly apartment sale price maintained the previous week’s rate of increase.”

In fact, the nationwide apartment sale price change rates were 0.25% on February 15, 0.25% on February 22, 0.24% on March 1, 0.24% on March 8, 0.23% on March 15, 0.24% on March 22, and 0.24% on March 29.

The nationwide apartment prices consistently showed an increase rate between 0.23% and 0.25%. Based on the nationwide apartment sale price change rate, it is more appropriate to say that a steady increase rate is being maintained rather than that it is falling.

In the real estate market, the apartment sale price change rate in Seoul receives more attention than the nationwide rate. Seoul’s apartment sale price change rates were 0.08% on February 15, 0.08% on February 22, 0.07% on March 1, 0.07% on March 8, 0.06% on March 15, 0.06% on March 22, and 0.05% on March 29. Compared to the mid-February survey, this shows a slight decline.

Based on Seoul’s apartment sale price change rate, the statement that the rate of increase is falling has some validity.

As such, evaluations can differ depending on the criteria, such as nationwide or Seoul. However, it is somewhat premature to claim housing market stabilization. The cumulative apartment sale price change rate from January to the March 29 survey was 1.63% nationwide last year, but this year it was 3.39%. In Seoul, it was 0.23% last year and 1.00% this year.

[Image source=Yonhap News]

This means the cumulative increase in apartment sale prices this year is significant. In some specific areas of the metropolitan area, prices have risen noticeably compared to last year.

In Uiwang, Gyeonggi-do, the cumulative apartment sale price change rate was 3.90% last year and 11.93% this year; in Goyang, 0.96% last year and 8.44% this year; in Namyangju, 2.38% last year and 9.32% this year. Hanam recorded 2.45% last year and 4.31% this year.

The rise in the 3rd phase new town areas such as Goyang, Namyangju, and Hanam is notable. However, even in these areas, the rate of increase in apartment sale prices has decreased compared to February. In Uiwang, the rate dropped from 1.09% on February 1 to 0.85% on March 29. In Goyang, it decreased from 0.76% on February 1 to 0.27% on March 29. Namyangju also saw a reduction from 0.96% on February 1 to 0.40% on March 29.

Seoul’s apartment sale price change rate has slightly declined compared to mid-February. The 3rd phase new town areas such as Namyangju and Goyang, which had shown significant increases, have also seen a slowdown in the rate of increase. The claim that the housing (apartment) sale price increase rate is falling is supported when based on Seoul and the 3rd phase new town areas.

However, since the nationwide apartment sale price change rate shows little difference between mid-February and late March, there remains doubt about the claim that the sale price increase rate is falling. The statement by Lee Ho-seung that the housing sale price increase rate is falling can be considered a “half-truth,” as evaluations vary depending on whether the basis is nationwide or Seoul, among others.