Sample Adjustment Includes New Buildings, Raising Average Prices
Real Estate Agency Adjusts After 1.5 Years... Seoul Up 200 Million Won
"Not Related to Accuracy" but Statistical Flaws Exist
Apartment complexes in the northeastern area of Seoul, including Nowon-gu and Dobong-gu [Image source=Yonhap News]
Since the Korea Real Estate Board redesigned the sample for the Housing Price Trend Survey, the average apartment prices in Seoul and other metropolitan areas have surged by hundreds of millions of won. The government maintains that the significant increase in the sample size, which included many newly built apartments, was the cause, and that previous statistics were not inaccurate. However, given the substantial price gap before and after the sample adjustment, criticisms about flaws in the statistics are inevitable.
According to the government on the 19th, the Real Estate Board recently increased the sample size for the Housing Price Trend Survey from 28,360 households to 46,170 households through a 'sample redesign' process. The apartment sample was more than doubled from 17,190 households to 35,000 households. After the new sample was first applied in the July survey, the average apartment sale price in Seoul jumped by 181.17 million won in just one month to 1.1093 billion won, sparking controversy over the accuracy of previous statistics.
The Real Estate Board typically conducts a full 'sample redesign' every 3 to 5 years to update the survey sample population and performs annual 'sample adjustments.' When such sample redesign (adjustment) processes occur, it is known that the inclusion of relatively high-priced 'newly built apartments' can cause the average price to rise to some extent.
A representative from the Real Estate Board explained, "Normally, the average price tends to jump before and after sample redesign and adjustment, but this time, the process was conducted after only 1 year and 6 months, and the sample size was doubled, which seems to have caused a larger increase. The increase in sample size and the rise in average sale price are unrelated."
However, the fact that the average sale price differed by hundreds of millions of won before and after the sample adjustment is being pointed out as a flaw in the statistics. Since the last sample adjustment was made in January last year, the Real Estate Board explains that the statistics did not accurately reflect reality for at least 1 year and 6 months until this sample redesign.
Although the accuracy has improved with the significant increase in the sample size this time, there are concerns that statistical flaws may continue depending on the sample adjustment (redesign) cycle. Sample adjustments are usually conducted annually, but this time it was done after 1 year and 6 months, and a full redesign may not be conducted for up to 5 years, meaning the timing of reflecting prices of newly built homes could be delayed depending on government will.
Meanwhile, the recent sample redesign has been evaluated as providing numerical proof of the high housing prices in Seoul and other metropolitan areas. The average apartment price in the metropolitan area rose 18.7% from 607.71 million won to 721.26 million won, ending the 'average 600 million won range' in just one month. In Seoul, Jung-gu, Seongdong-gu, Yangcheon-gu, Yeongdeungpo-gu, and Dongjak-gu saw their average prices rise from the previous 800 to 900 million won range to over 1 billion won.
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