[Asia Economy Reporter Ryu Taemin] The phenomenon of villa (multi-family and row houses) sales volume surpassing apartment sales in Seoul has continued for 16 consecutive months. This is interpreted as demand shifting to villas due to difficulties in purchasing a home caused by soaring apartment prices and tightened loan regulations, as well as growing expectations for redevelopment projects.
According to the Seoul Real Estate Information Plaza on the 16th, last month villa sales reached 3,186 cases, about 2.3 times the apartment sales (1,394 cases). Considering the 30-day reporting deadline for transactions, the number of transactions may fluctuate, but the trend of villa sales exceeding apartment sales is expected to continue.
The proportion of villas in total housing sales transactions has also increased. According to the Korea Real Estate Board’s sales volume by housing type, among the 5,098 housing sales transactions in Seoul in March, villas accounted for 3,303 cases, making up 64.8% of the total housing sales volume. This is the highest monthly figure since the Korea Real Estate Board began compiling related statistics in 2006. In contrast, the proportion of apartment sales in Seoul during the same period was 24.2%, the lowest on record.
Loan Regulations and High Prices Lead to Villas Surpassing Apartments... Expectations for Redevelopment Regulation Easing Also Play a Role
Until 2020, apartment sales in Seoul outnumbered villa sales. However, since last year, as apartment prices in Seoul soared to unprecedented levels, raising the threshold for transactions, more buyers have turned to relatively affordable villas. Additionally, this year, with the introduction of the Debt Service Ratio (DSR) regulations making it more difficult to obtain loans from financial institutions, villas, which are less affected by loan restrictions compared to high-priced apartments, have become more popular. In fact, for 16 months starting from January last year, villa sales volumes in Seoul have surpassed apartment sales volumes.
Moreover, growing expectations for easing redevelopment regulations have also contributed. Seoul City introduced the Rapid Integrated Planning Private Redevelopment project last year to expedite private-led development projects. At the end of last year, 21 private redevelopment candidate sites were selected, and a total of 33 sites are currently pursuing rapid integrated planning redevelopment.
However, there are voices cautioning against the sudden villa craze. Song Seunghyun, CEO of Urban and Economy, advised, "If you buy a villa at a high premium due to redevelopment expectations and the housing market undergoes a correction later, you could suffer significant losses. Especially unlike apartments, villas do not have well-disclosed market price information and have lower liquidity, so buyers should be cautious."
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