"Transaction Cliff in Full Swing?"... Gyeonggi-do Apartment Transactions Decrease More Than During 2008 Financial Crisis

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Real estate transaction volume in Gyeonggi Province in the first half of this year decreased by 42.6% compared to the first half of last year. In particular, apartment transaction volume recorded the lowest level since Gyeonggi Province began compiling related statistics in 2006 during the same period.

According to Gyeonggi Province on the 21st, real estate transaction volume in the province, which had been gradually recovering since January this year, turned to a downward trend in May and sharply dropped by 27.8% in June to 19,436 cases compared to the previous month (26,903 cases).

Also, the total transaction volume for the first half from January to June this year was 140,751 cases, down 42.6% from 245,055 cases during the same period last year. This is 26.1% lower than the 190,371 cases in the second half of last year when the full-scale transaction cliff phenomenon began to appear.

By type, the decrease in housing transactions was prominent. For multi-family housing, the transaction volume in the first half was 52,297 cases, down 57.5% from 123,007 cases during the same period last year. Individual housing transactions also decreased by 37.2%, with 5,444 cases compared to 8,668 cases in the same period last year.

In particular, apartment transaction volume plunged by 67.9%, from 91,506 cases to 29,334 cases, leading the overall real estate transaction slump. This is even lower than the 34,537 cases during the global financial crisis in the second half of 2008.

The region with the largest decrease in apartment transactions was Suwon City, where 1,951 cases were traded in the first half of this year, down 7,344 cases (79%) from 9,295 cases during the same period last year.

Transactions of land and officetels also decreased by 27% and 24.3%, respectively, with 75,414 cases and 7,596 cases compared to 103,347 cases and 10,033 cases last year.

Meanwhile, an analysis of the realization rate of 99,501 real estate transactions in Gyeonggi Province in the first half of this year showed that the annual average realization rate was 57% for multi-family housing, 53% for individual housing, and 47% for land.

The realization rate refers to the ratio of the official price to the actual transaction price, and the government's target realization rates for 2022 were 71.5% for multi-family housing, 58.1% for individual housing, and 71.6% for land.

This year, due to the sharp decline in real estate transaction volume leading to a drop in actual transaction prices and the rise in official prices, the realization rate for multi-family housing increased by 2 percentage points compared to the previous year. The realization rates for individual housing and land remained similar to last year.

Looking at detailed data by transaction amount, the average realization rate for multi-family housing in the under 300 million KRW range was 55%, indicating that the official prices of low-priced housing relatively did not reflect market prices.

For individual housing, the average realization rate in the under 300 million KRW range was 59%, exceeding the average, showing the opposite trend.

For land, the realization rate in the under 300 million KRW range was 47%, while in the over 900 million KRW range it was 54%, indicating that official prices for low-priced land were set at a lower level.

A provincial official explained, "Since official prices serve as the basis not only for taxation but also for about 60 different types of charges, maintaining fairness is most important," adding, "We will continue to closely analyze trends in official price changes to enhance the reliability of official prices."