Only 41 Transactions Recorded in February... Monthly Record Low Trading Volume
No Transactions at All in Gangnam, Gwangjin, Yongsan... Apartment Prices Decline for 3 Consecutive Weeks
Seocho, Songpa, and Other Gangnam 4 Districts Also Turn Down After 1 Year and 8 Months
In February, a record-low transaction freeze continues, with no apartment sales recorded in 8 out of 25 autonomous districts in Seoul. While Seoul apartment prices have declined for three consecutive weeks, even the Gangnam 4 districts (Seocho, Gangnam, Songpa, and Gangdong) have turned downward for the first time in 1 year and 8 months. In particular, in Songpa, there are urgent sale properties with prices lowered by up to 500 million KRW, but even these are not easily sold. The burden of financing has increased due to interest rate hikes and tightened loan regulations, and with less than a month remaining before the presidential election, the market sentiment is increasingly cautious.
According to the Seoul Real Estate Information Plaza on the 11th, only 41 apartment transactions were concluded in Seoul so far this February. This is a record-breaking level of the lowest monthly transaction volume ever. Especially, 8 districts among the 25 in Seoul, including Gangnam-gu, Gwangjin, Dobong, Dongjak, Seodaemun, Seongdong, Yongsan, and Jung-gu, recorded zero transactions during this period. The district with the highest transaction volume was Guro-gu, but it was only 6 transactions.
Seoul apartment transaction volume peaked at 4,703 in July last year, then dropped to the 2,000 range in September. In November and December, it fell to the 1,000 range. January this year recorded 815 transactions, the lowest ever. Compared to a year ago (5,795 transactions), this is an 86% decrease. Although the reporting deadline for January (within 30 days after the transaction) has not yet passed, it is highly likely that the transaction volume will fall below 1,000, marking the lowest since statistics began to be compiled in 2006. The lowest monthly transaction volume for Seoul apartments was 1,730 in January 2019, and the lowest monthly figure was 1,163 in November 2008 during the global financial crisis.
As transaction volume decreased, Seoul apartment prices in the first week of February fell by 0.01% compared to the previous week, maintaining a decline for three consecutive weeks. Among the 25 districts in Seoul, 24 districts recorded either a decline or remained flat, except for Jungnang-gu, which rose by 0.01%. Notably, the Gangnam 4 districts?Gangnam, Seocho, Songpa, and Gangdong?that had supported housing prices fell by 0.01% compared to the previous week. Songpa fell by 0.02% compared to the previous week, marking its first decline in 88 weeks since the first week of June 2020 (-0.03%). Gangnam and Seocho remained flat for two consecutive weeks following the previous week.
The Korea Real Estate Board explained, "With various downward pressures such as additional interest rate hikes and falling jeonse prices, the buyer-favored market continues. Some popular complexes in the Gangnam area, which had maintained high asking prices, showed a decline as transactions occurred at prices lower than the record highs. In particular, in Songpa-gu, transactions at declining prices occurred in popular complexes that had previously seen significant price increases."
According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system, a 124.22㎡ unit in Resentz, Jamsil-dong, Songpa-gu, was traded for 3 billion KRW (6th floor) on January 8, dropping by 500 million KRW in just one week. Also, an 84㎡ unit in Parkrio, Sincheon-dong, was traded for 2.164 billion KRW (30th floor) on the 24th of last month, which is 356 million KRW lower than the highest price of 2.52 billion KRW (24th floor) recorded on October 9 last year.
However, some analyses suggest that the current price decline may not reflect a firm trend due to the extremely low transaction volume. Furthermore, with the presidential election on March 9 approaching, the cautious market sentiment may be a temporary phenomenon, and it is premature to judge this as a full-fledged downward trend.
Kim Hyoseon, Senior Real Estate Advisor at NH Nonghyup Bank, said, "The recent adjustment in Seoul apartment prices is due to policy uncertainties ahead of the presidential election and loan regulations, which have reduced purchasing power, resulting in only intermittent transactions. It is too early to consider this a major downward trend, and it is likely that the first quarter will see a wait-and-see position."
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