[Asia Economy Reporter Ryu Tae-min] “Since there are no people looking for houses, not a single deal has been made for over three months. Even if properties are listed as urgent sales at low prices, they don't sell, so the inventory just keeps piling up.” (Representative of A Real Estate Agency in Jamsil-dong, Songpa-gu, Seoul)
The downward trend in housing prices in Songpa-gu, once the epicenter of rising home prices, is becoming serious. Due to consecutive interest rate hikes increasing loan interest burdens and sluggish progress in easing reconstruction regulations, demand has sharply decreased. With apartment sale prices falling for 23 consecutive weeks, the recent decline rate is the highest among Seoul's 25 autonomous districts.
According to the Korea Real Estate Board's weekly apartment price trend survey on the 2nd, apartment sale prices in Songpa-gu fell by 0.43% in the fourth week of October. This is the largest decline among Seoul's 25 autonomous districts, and when expanded to the entire month of October, it represents a 1.39% drop in just one month. Apartment sale prices in Songpa-gu have continued to decline for 23 consecutive weeks, accumulating a 2.78% decrease since the beginning of this year.
The weekly decline rate in Songpa-gu has been gradually increasing recently. Until the third week of August (as of the 15th), the rate of change was -0.07%, remaining in single digits, but from the fourth week of August (as of the 22nd), it deepened over 10 consecutive weeks as follows: -0.10% → -0.12% → -0.16% → -0.18% → -0.22% → -0.23% → -0.27% → -0.31% → -0.38% → -0.43%.
The pronounced decline in Songpa-gu is attributed to the impact of consecutive interest rate hikes. Song Seung-hyun, CEO of Urban and Economy, explained, “Apartment complexes located in Songpa-gu have high price ranges, so the increased interest burden due to rate hikes seems to have had an effect. Complexes priced over 1.5 billion KRW likely used loans beyond mortgage loans, increasing their financial burden.”
Historic Transaction Freeze... Both Reconstruction and Large Complexes See Frequent Declining Deals
In fact, declining transactions are occurring frequently. According to the Ministry of Land, Infrastructure and Transport's real transaction disclosure system on this day, the Jamsil Els apartment in Jamsil-dong, Songpa-gu, considered an elite apartment, with an exclusive area of 84.8㎡, changed hands on the 7th for 1.95 billion KRW, dropping 720 million KRW from the highest price of 2.67 billion KRW recorded in March.
Nearby, the Resentz apartment with 84.9㎡ was transacted on the 8th of last month for 2.02 billion KRW, down 630 million KRW from the previous highest price of 2.65 billion KRW, and the Trizium apartment with 84.9㎡ was sold in August for 2.08 billion KRW, 340 million KRW lower than the highest price of 2.42 billion KRW. A representative from B Real Estate Agency in Jamsil-dong said, “Since home prices rose sharply last year, there is less actual residential demand than before, leading to an accumulation of listings. There are quite a few urgent sales priced 200 to 300 million KRW lower than recent market prices.”
This trend is also seen in reconstruction complexes. The Asia Athlete Village apartment in Jamsil-dong, one of the 'Olympic Trio,' with an area of 178.3㎡, was sold on September 28 for 4.2 billion KRW, which is 530 million KRW lower than the highest price of 4.73 billion KRW recorded in January.
The Olympic Athlete Village in Bangi-dong with 83㎡ changed hands on the 8th of last month for 1.87 billion KRW, dropping 550 million KRW from the previous highest price of 2.42 billion KRW, and the Olympic Family Town in Munjeong-dong with 84.7㎡ was sold on the 1st of last month for 1.5 billion KRW, down 435 million KRW from the previous highest price of 1.935 billion KRW. A representative from C Real Estate in Bangi-dong said, “Contrary to expectations earlier this year, the easing of reconstruction-related regulations has been sluggish, frustrating many homeowners. As local home prices fall, listings increase, but demand is lacking, so transactions have virtually stopped.”
The characteristic of being a bed town with many large complexes is also cited as a background for the sharp decline. CEO Song explained, “Songpa-gu has many large complexes with frequent transactions, so price reflections are relatively quick. Since prices rose steeply last year, the market has turned bearish, causing prices to drop rapidly.”
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