"Pressure from Interest Rates... Increase in Apartment Day Traders Unable to Endure"

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Owners of Collective Building Assets

8.5% Sell Within One Year

One in Four Resell Within Three Years

[Asia Economy Reporter Kim Min-young] The proportion of owners of collective buildings (apartments, officetels, villas, commercial buildings, etc.) who resell their real estate assets within one year has increased. This appears to be because, amid the ongoing interest rate hike rally, collective building owners chose to sell rather than hold due to interest payment pressures. Additionally, one in four resold their collective buildings within three years of ownership.

On the 9th, Zigbang analyzed the number of ownership transfer registrations from 2017 and found that among those who sold collective buildings nationwide, the proportion of sellers who resold within one year of ownership was 8.5% as of the end of October this year. Collective buildings refer to structures where several independent units exist within one building, including apartments, officetels, villas, and commercial buildings.

The nationwide proportion of sellers who sold collective buildings within one year of ownership was 7.4% in 2017, then declined to 7.0% and 6.9% in 2018 and 2019 respectively, before slightly rising to 7.5% in 2020. After interest rate hikes became more pronounced, it increased to 8.4% in 2021 and reached an all-time high this year. This rate is notable as it occurred amid a continuing transaction freeze. According to Zigbang, the number of ownership transfer registrations (sales) for collective buildings was 422,042 in Q4 2020 but dropped sharply by 41% to 248,633 in Q2 this year. The increase in short-term transactions amid the sharp decline in overall transactions suggests that short-term holders within three years have put more properties on the market.

The proportion of those reselling within two years also fell from 7.5% in 2020 to 6.0% last year but rose again to 7.1% this year. The proportion of sellers who disposed of collective buildings within three years of purchase reached 25%. This means one in four buyers sold within three years. This rate decreased from 25.3% in 2020 to 23% last year but increased back to 25% this year.

The main reason for the increase in short-term holders is the impact of interest rate hikes. Many purchased homes with mortgage loans during low-interest periods but now face pressure to sell due to the recent rapid rise in interest rates. In fact, following the base rate hikes, the proportion of household loans in higher interest rate brackets has increased. In Q1 2021, loans with interest rates below 3% accounted for 78.6%, but by July, loans with rates above 3% accounted for 83.3%, increasing financial burdens.

Ham Young-jin, head of Zigbang Big Data Lab, said, "Although nationwide collective building transactions have sharply declined, the proportion of short-term sellers is increasing," adding, "As housing prices are expected to fall and interest costs rise due to consecutive rate hikes, more sellers are trying to dispose of their properties."