[Second Half Housing Market Review] "Zero Inquiries"... Real Estate Sales Disappear in Gangbuk Area

Afternoon of the 5th visit to Wolgye-dong area, Nowon-gu, Seoul
"Sales transactions almost disappeared," voices agree
Some price reductions due to decreased buying demand
Lease transactions slightly better but more monthly rent inquiries than jeonse
Same situation in Mapo-gu as well as Nowon-gu

On the afternoon of the 5th, I visited the areas of Miryung, Miseong, Samho 3rd and 4th complexes in Wolgye-dong, Nowon-gu. When I asked local real estate officials about the current transaction situation, the response was "There are almost no sales these days." Photo by Hwang Seoyul

[Asia Economy Reporter Hwang Seoyul] "Listings keep piling up. We're all about to starve to death. It's the worst." (Mapo-gu A Real Estate Agency Representative)

"How's the situation? Business isn't going well, so we're doing this interview now. Not a single inquiry came in today." (Nowon-gu B Real Estate Agent)

On the afternoon of the 5th, I visited the area around Miryung, Miseong, Samho 3rd and 4th complexes in Wolgye-dong, Nowon-gu. As soon as I opened the office door, the real estate agents all welcomed me. Once they realized I was there for reporting purposes, they quickly showed signs of disappointment since I was not a customer, but they still treated the rarely visited office visitors kindly.

Real Estate Transaction Cliff in Gangbuk... "Even with Good News, Buyers Don't Show Up"

Photo by Hwang Seoyul

Real estate agents in the area unanimously said, "Sales transactions have almost disappeared." According to the Seoul Real Estate Information Plaza as of the 8th, the number of apartment sales in Nowon-gu in May was 96, which is about one-fifth of the 513 transactions in the same month last year. A representative from B Real Estate near Wolgye-dong, Nowon-gu said, "It's almost like a shutdown," adding, "This complex was considered a rising area due to its proximity to the station and development plans, but in the current situation, even if there is good news, it seems there is no reaction."

The stagnation in sales transactions appears to be greatly influenced by the decrease in buyer demand. The head of C Real Estate in Nowon-gu said, "Listings keep coming out," explaining, "Some people put their homes on the market because prices keep falling, and some because of the announcement excluding multi-homeowners from capital gains tax surcharges." However, he added, "Buyers are different. Even if there are urgent sales, buyers expect prices to drop further, so they don't commit." The Seoul Apartment Sales Supply-Demand Index by the Korea Real Estate Board stood at 86.8, marking a decline for nine consecutive weeks since May 9.

Consequently, sales prices are also falling. For example, two transactions of Samho 4th complex (50.18㎡) took place last month, both at 690 million KRW. In July last year, when demand surged due to aggressive borrowing, the same units were sold for 760 million KRW.

Other Gangbuk district local governments are experiencing similar situations. In Ahyeon-dong, Mapo-gu, 'Mapo Raemian Prugio (84.89㎡)' was sold for 1.935 billion KRW in September last year but dropped by 60 million KRW to 1.825 billion KRW last month. A representative from D Real Estate in Mapo-gu explained, "Asking prices themselves are falling," adding, "Similar listings that exceeded 1.9 billion KRW last year now come out about 100 million KRW lower." In fact, on Naver Real Estate, listings of the same size were found around 1.85 billion KRW. 'Mid-Year Housing Market Review'

"Inquiry Volume: Monthly Rent > Jeonse > Sales" ... Changed Transaction Patterns Due to Interest Rate Hikes

Photo by Asia Economy

Lease transactions were better than sales but showed different patterns than before. In particular, the decline in Jeonse (long-term deposit lease) transactions stood out. According to the Seoul Real Estate Transaction Plaza (as of the 7th), Jeonse accounted for 63.46% and 53.92% of total lease transactions in the first half of this year (January to June) in Nowon-gu and Mapo-gu, respectively. Compared to the same period last year, when the figures were 68.72% and 62.85%, this represents a drop of 5.26 and 8.93 percentage points. Since June contracts are not fully accounted for, these figures may change later. A representative from D Real Estate said, "Jeonse listings used to be absorbed within 1-2 weeks, but now they stay on the market for about a month," adding, "The demand for moving has decreased further due to the lease renewal right."

Instead, reverse Jeonse transactions, where tenants pay a high deposit plus a small monthly rent, have increased. This is because with the base interest rate rising, the difference between Jeonse loan interest rates and monthly rent is minimal, making Jeonse less advantageous for tenants in terms of financial preservation compared to monthly rent. The head of A Real Estate in Mapo-gu said, "In terms of inquiry volume, monthly rent demand is the highest, followed by Jeonse and then sales," adding, "Previously, Jeonse was more popular, but with rising interest rates, the trend is shifting toward preferring monthly rent." An agent from E Real Estate near Samho 4th complex in Wolgye-dong, Nowon-gu also said, "Monthly rent supply seems to be slightly less than demand."