Prices Soaring in Songdo and Cheongra Also Show Decline Transactions... Incheon Apartment Price Increase Slows Down

Incheon Apartment Sale Price Increase Rate Slows for 9 Consecutive Weeks
Last Month, 4 out of 10 Transactions Below Highest Price 'Declining Transactions'
Accumulated Fatigue from Rapid Price Surge and Impact of Loan Regulations

View of Seoul apartments from 63 Square. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Ryu Tae-min] Amid the ongoing 'transaction cliff' phenomenon, the rate of increase in apartment prices in Incheon has slowed for nine consecutive weeks. This is due to accumulated fatigue from the prolonged rapid price surge and the government's strengthened loan regulations, which have somewhat dampened buying demand. In particular, concerns are emerging that the market may be turning downward, as falling transactions are occurring frequently even in Songdo and Cheongna International City, areas that had maintained rapid price increases until now.

According to the weekly apartment price trend announced by the Korea Real Estate Board on the 14th, the apartment price increase rate in Incheon for the first week of this month (as of the 6th) was 0.17%, showing a smaller increase compared to the previous week (0.22%). Compared to the first week of November (as of the 1st), when the increase rate was 0.37%, this figure is less than half. In Incheon, from the first week of October (as of the 4th), the increase rates have consecutively slowed for nine weeks: 0.44% → 0.42% → 0.40% → 0.38% → 0.37% → 0.33% → 0.29% → 0.25% → 0.22% → 0.17%.

By region, the rate of increase in Yeonsu-gu and Seo-gu, which had maintained rapid price rises, has both slowed. Yeonsu-gu, which includes Songdo International City, recorded the highest increase in Incheon at 0.64% in the first week of October but plummeted to 0.45% in the first week of November and further down to 0.16% in the first week of December. Seo-gu, which benefited significantly from the Cheongna International City effect, also continued its downward trend during the same period, dropping from 0.41% → 0.28% → 0.11%.

The proportion of transactions where the actual transaction price fell compared to the previous transaction has also increased significantly. According to data on 'actual apartment transaction price trends in the metropolitan area' submitted by the Ministry of Land, Infrastructure and Transport to Kim Hoe-jae, a member of the Democratic Party, the proportion of falling transactions in Incheon apartments last month was 39.6%. In other words, nearly 4 out of 10 apartment transactions in Incheon last month were conducted at lower prices than previous transactions. The proportion of falling transactions in Incheon has been rising for three consecutive months since August: 19.1% → 20.7% → 27.4% → 39.6%.

In fact, according to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system, a 189㎡ (exclusive area) unit in 'Songdo Poonglim I-One Complex 6' in Songdo-dong, Yeonsu-gu, was sold for 1.4 billion KRW on the 12th of last month. Compared to the highest price of 1.6 billion KRW recorded in August, this represents a 200 million KRW drop over three months.

Nearby, a 59.9㎡ unit in 'Songdo The Sharp Central City' changed hands for 750 million KRW on the 1st, down 70 million KRW from the previous highest price of 820 million KRW in September. A 74.9㎡ unit in 'Verdium The First' also signed a sales contract for 888 million KRW on the 27th of last month, down 82 million KRW from the highest transaction price of 970 million KRW in October.

This trend is also appearing in Cheongna International City. An 84.4㎡ unit in 'Cheongna International Financial District Hanyang Sujain Lake Blue' in Cheongna-dong, Seo-gu, changed hands for 864 million KRW on the 13th of last month. This price is about 200 million KRW lower than the highest price of 1.055 billion KRW recorded in September for the same unit size. The 84.9289㎡ unit in Cheongna 29 Block Hoban Verdium was traded for 765 million KRW on the 28th of last month, more than 100 million KRW lower than the highest price of 870 million KRW for the same unit size that month.

Song Seung-hyun, CEO of Urban and Economy, explained, "In Incheon, the significant rise in house prices has led to accumulated price fatigue among buyers, and loan regulations and interest rate hikes have reduced expectations for further increases. The upcoming presidential election next year has also contributed to a cautious market sentiment, leading to reduced transactions."