Many Want to Sell but Few Want to Buy... 수도권 Apartment Supply-Demand Index Plummets

Capital Region Sales Supply-Demand Index Falls Below 90 for the First Time in Over 3 Years
Seoul Sees 8th Week of Purchase Contraction...Transaction Cliff and Price Decline

The supply-demand imbalance in the apartment sales market, where the number of sellers is increasing while buyers are decreasing, is accelerating.

According to a survey by the Korea Real Estate Board on the 1st, the apartment sales supply-demand index in the metropolitan area recorded 89.8 this week, falling below 90. This is the first time in 2 years and 10 months since the survey on August 12, 2019 (89.6) that the metropolitan area sales supply-demand index has dropped below 90. The sales supply-demand index indicates that the lower it is below the baseline (100), the more sellers there are in the market compared to buyers.

In Seoul, the index fell to 87.0, marking an 8-week consecutive decline. Specifically, the indices of the five major districts in Seoul all decreased compared to last week. Although the number of listings has increased due to the temporary exclusion of the capital gains tax surcharge on multiple homeowners implemented since early May, the buying demand has decreased due to interest rate hikes and concerns over falling house prices. The sales supply-demand indices in Gyeonggi-do and Incheon also fell to 91.0 and 91.6 respectively, down from last week’s 91.1 and 91.9.

As the nationwide apartment price decline steepens, there is a considerable possibility that the supply-demand index will fall further in the future. Apartment prices in Seoul have declined for five consecutive weeks. According to the 'Weekly Apartment Price Trend for the 4th week of June,' Seoul apartment prices fell by 0.03% following last week. The downward trend continues across the entire metropolitan area. In May, the volume of apartment transactions in Seoul plummeted to 35% of last year’s level, marking the lowest ever for May. The Real Estate Board analyzed, "Although intermittent transactions occurred mainly in ultra-high-priced areas in some regions, overall, concerns over additional interest rate hikes and the accumulation of listings have led to a wait-and-see attitude, weakening transaction sentiment and sustaining the downward trend throughout Seoul."

The situation is similar across the entire metropolitan area. Apartment prices in Gyeonggi-do fell further from -0.04% last week to -0.05%, and in Incheon from -0.06% last week to -0.08%. In Incheon, the decline is expanding due to last year’s price fatigue and the impact of new housing supply. With the widening decline in Gyeonggi and Incheon, the overall apartment price change rate in the metropolitan area also dropped by 0.05%, a larger decrease than last week’s -0.04%. Nationwide apartment prices also saw an increased decline from -0.03% last week to -0.04% this week.