Despite Seoul Apartment Transaction Freeze, Buying Sentiment Strengthens Again "Increased Demand for Reconstruction and Mid-Low Price"

On the 5th, from the Lotte World Tower observatory in Songpa-gu, Seoul, where apartment prices and jeonse prices continue to rise without turning downward, apartments in Songpa-gu are being observed. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Jo Gang-wook] Despite the transaction freeze, apartment buying sentiment in Seoul has strengthened again. The buying momentum, centered on reconstruction and mid-to-low priced complexes, has not weakened, raising concerns about a shortage of jeonse supply and resulting jeonse difficulties.

According to the Korea Real Estate Board on the 23rd, the apartment sales supply-demand index in Seoul this week (based on the survey on the 19th) rose by 2.6 points from last week (105.1) to 107.7. The sales supply-demand index has remained above 100 for 15 consecutive weeks since the second week of April, indicating a 'demand surplus.' The sales supply-demand index is calculated by analyzing surveys from member real estate agencies and the number of online listings, quantifying the balance between demand and supply. The closer the index is to '0,' the more supply exceeds demand; the closer to '200,' the more demand exceeds supply. Exceeding the baseline of 100 indicates stronger buying sentiment.

In particular, although the index showed a declining trend for five consecutive weeks starting from the second week of June, it reversed to an upward trend this week. With more people wanting to buy than sell, Seoul apartment prices have been increasing their rate of rise for four months. The Real Estate Board explained that buying momentum continued this week, centered on reconstruction and mid-to-low priced complexes, and that transactions in ultra-high-end complexes in the Gangnam area were occasionally confirmed at record prices, indicating ongoing price increases.

Apartment buying sentiment was strong across all of Seoul. The sales supply-demand index in the northeast area, which includes Nowon-gu, Dobong-gu, and Gangbuk-gu?areas that have recorded the highest apartment price increases in Seoul for 15 consecutive weeks?was 110.4, the highest in Seoul. The northeast area rose 3.2 points from last week (107.2), surpassing the 110 mark for the first time since the fourth week of February. Next highest was the southeast area, which includes the Gangnam 3 districts known for ultra-high-end apartments, rising slightly from 108.6 to 108.8, followed by the southwest area (102.2→106.5), the downtown area (101.8→104.5), and the northwest area (101.2→102.4).

The metropolitan area, including Gyeonggi and Incheon, showed similar trends. Gyeonggi rose from 112.4 last week to 114.1 this week, and Incheon increased from 108.1 to 109.9. Overall, the metropolitan area index rose from 109.6 to 111.6.

Jeonse demand also continues to exceed supply. Seoul's apartment jeonse supply-demand index rose slightly from 107.3 to 107.4, remaining above the baseline for 1 year and 8 months since the fourth week of October two years ago. By region, the northeast area, which has many mid-to-low priced jeonse units, rose from 110.6 to 111.3, the highest, followed by the northwest area, including Eunpyeong-gu, Seodaemun-gu, and Mapo-gu, which increased by 2.2 points to 106.3.

The downtown area (101.0→105.9) and southwest area (104.3→105.2) also saw their indices rise compared to the previous week, remaining above the baseline. In the southwest area, ahead of the moving season during school vacations, jeonse demand concentrated mainly in the Mokdong New Town complexes, raising concerns about supply shortages.

On the other hand, the southeast area was the only region in Seoul to decline, dropping from 109.7 to 105.8. Until now, jeonse difficulties had been spreading to Seocho-gu and nearby areas due to reconstruction relocation demand in Banpo-dong and other areas in the southeast. However, recent deregulation of the '2-year reconstruction residence obligation' has led to an increase in jeonse listings, especially in some reconstruction complexes such as Eunma Apartments in Daechi-dong, somewhat easing supply pressure.