Korea Real Estate Board "Increase in Declining Transactions in Gangnam Area"
Gangnam 4 Districts' Sales Supply-Demand Index Falls for 8 Consecutive Weeks
Record-High Transactions Continue... Difficult to Feel the Decline
Statistics and Asking Prices Show Different Trends, Confusing Buyers
Conflicting evaluations between the government and the industry surrounding the real estate market in Seoul's Gangnam area are increasing confusion among buyers. While apartment prices nationwide are showing signs of slowing growth, the government maintains that a full-fledged decline in transactions has begun even in the Gangnam area. However, some parts of Gangnam continue to see steady record-high transactions, leading to analyses that it is premature to speak of market stabilization.
According to the weekly apartment price statistics released by the Korea Real Estate Board on the 7th, as of the 3rd, apartment prices in the four Gangnam districts?Gangnam, Seocho, Songpa, and Gangdong?rose by 0.04%, a decrease in the rate of increase compared to the previous week (0.06%). These areas have experienced a slowdown in price increases for 11 consecutive weeks since the third week of October last year. The Real Estate Board also noted the day before that "even in Gangnam, where asking prices were maintained, the increase in actual transaction prices falling has led to a reduced rate of price growth."
In fact, statistics show that the Gangnam real estate market has somewhat slowed compared to last year. The apartment sales supply-demand index for the four Gangnam districts has declined for eight consecutive weeks since the second week of November last year, reaching 93.3 this week. This index quantifies the supply-demand ratio by analyzing surveys from frontline real estate agencies and online listings, with a range from 0 to 200; the closer to 0, the more supply exceeds demand.
In Seoul, when a single-homeowner acquires another property and temporarily becomes a two-homeowner, they must dispose of the existing home within one year to avoid the application of a higher capital gains tax rate. Therefore, many homeowners are reportedly considering selling. As the real estate market gradually enters a stabilization phase, selling before prices fall helps save on taxes and maximize capital gains.
However, many in the market believe it is premature to talk about a stabilization phase in the Gangnam real estate market. Record-high transactions continue to be made in various parts of Gangnam. According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system, a 94㎡ unit (exclusive area) in Raemian Daechi Palace, Daechi-dong, Gangnam-gu, was traded for 4.05 billion KRW on December 15 last year, which is 300 million KRW higher than the previous highest price.
A 120㎡ unit in Munjeong Raemian, Munjeong-dong, Songpa-gu, was sold for 1.85 billion KRW on December 18 last year, rising 50 million KRW within a month, and a 160㎡ unit in Hyundai 2nd Complex, Apgujeong-dong, Gangnam-gu, was traded on the same day for 6.02 billion KRW, 200 million KRW above the previous record price. A representative from a real estate agency in Daechi-dong, Gangnam-gu, said, "More homeowners are choosing not to lower asking prices yet and are waiting to see how the market moves," adding, "Because prices are high, transactions are not frequent."
The relative firmness of Gangnam housing prices is interpreted as a result of increased tax burdens on real estate and numerous regulations, which have heightened interest in owning a ‘smart single property.’ On online real estate communities, many opinions suggest that only the provinces and outskirts of the metropolitan area have entered a downward trend, while major complexes in Gangnam remain solid.
According to statistics from the real estate information company ‘Asil,’ as of this date, the total number of apartment listings in Gangnam-gu is 3,776, which is actually 1.4% less than a month ago (3,827 listings). While the government repeatedly emphasizes, citing the Real Estate Board's statistics, that the real estate market is entering a firm stabilization phase, the high asking prices in Gangnam are causing confusion among buyers who do not feel a price decline.
Professor Shim Gyo-eon of Konkuk University's Department of Real Estate explained, "Since apartment prices in Seoul and other areas have not yet turned negative, it is premature to say a downward trend has started, even if the rate of increase has slowed," adding, "The government's expression of ‘real estate stabilization’ is inappropriate."
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