Heavy Rainfall During Vacation Season... Simultaneous Decline in Sales and Jeonse Prices in the Seoul Metropolitan Area

Real Estate R114, Apartment Price Trends in the Seoul Metropolitan Area

[Asia Economy Reporter Kim Hyemin] Apartment sale and jeonse prices in Seoul, Gyeonggi, Incheon, and new towns have simultaneously declined. The real estate market has further contracted due to heavy rains coinciding with the summer vacation season.

According to Real Estate R114 on the 13th, the apartment sale prices in Seoul in the second week of August fell by 0.02% compared to the previous week, turning downward again. Redevelopment apartments dropped by 0.01%, and general apartments also decreased by 0.02%.

In Seoul, the market became even quieter due to the combination of base interest rate hikes, concerns over economic recession, the summer off-season, and heavy rains. As a result, none of the 25 autonomous districts in Seoul saw price increases this week. Yongsan, which had seen price rises following the Yongsan International Business District development plan, shifted to stable prices this week. Gangnam and Seocho, which had driven price increases, also continued to weaken.

By region, the prices fell in the order of ▲Gwanak (-0.22%) ▲Gangdong (-0.08%) ▲Gwangjin (-0.05%) ▲Geumcheon (-0.04%) ▲Gangnam (-0.02%).

New towns declined by 0.01% compared to the previous week. Gwanggyo (-0.07%) and Sanbon (-0.02%) fell, while Jungdong (0.02%) rose. Other areas remained stable. Gyeonggi and Incheon fell by 0.02% compared to the previous week. By region, ▲Suwon (-0.07%) ▲Anyang (-0.06%) ▲Goyang (-0.04%) ▲Gimpo (-0.03%) declined.

Regarding the jeonse market, concerns about a jeonse crisis were raised ahead of the two-year implementation of the lease renewal request right in August, but the decline in the metropolitan area’s jeonse market deepened. This was due to the seasonal off-season with little demand movement and transactions mainly consisting of renewal contracts. Seoul’s jeonse market fell by 0.02% compared to the previous week, while Gyeonggi, Incheon, and the metropolitan area all dropped by 0.01%.

Im Byungcheol, head of the research team at Real Estate R114, said, "The housing supply measures to be announced next week will be a benchmark to gauge the success or failure of real estate policies over the next five years." He added, "However, there are many hurdles to overcome, such as rising construction raw material costs, concerns over economic recession, and the possibility of legal amendments in a situation where the opposition holds a majority." He continued, "The first supply plan announced by the new government should include not only a simple housing supply plan but also a phased supply plan along with concrete implementation measures to deliver a stronger message to the market."