Dobong Falls 0.99%... Apartment Prices See Another Largest Drop

A red light is on at a traffic signal near an apartment in downtown Seoul. (Photo by Asia Economy DB)

[Asia Economy Reporter Ryu Taemin] Apartment sale and jeonse prices have once again recorded the largest drop in history. As the Bank of Korea has implemented consecutive base rate hikes, the downward trend in housing prices is expected to continue for the time being.

According to the 'Weekly Apartment Price Trend for the 4th week of November' released by the Korea Real Estate Agency on the 1st, apartment prices in Seoul fell by 0.56% compared to last week (-0.52%). This marks the 27th consecutive week of decline and breaks the record for the largest drop for four consecutive weeks since the Real Estate Agency began price surveys in May 2012.

Looking at the regions, the decline was particularly notable in the 'Nodogang' (Nowon, Dobong, Gangbuk districts) area. Apartment prices in Dobong-gu fell by 0.99%, the largest drop in Seoul, followed by Nowon-gu at 0.95% and Gangbuk-gu at 0.87%.

In the Gangnam area, Gangnam-gu (-0.34%), Seocho-gu (-0.22%), and Songpa-gu (-0.48%) all continued to decline. Gangdong-gu also fell by 0.54%, resulting in a 0.39% drop across the entire southeastern region.

The Real Estate Agency analyzed, "The ongoing base rate hike trend and expectations of prolonged real estate price declines have led to a continued wait-and-see attitude," adding, "Due to differences in price perceptions between sellers and buyers, only urgent sale properties are sporadically traded, and the downward trend continues with an expanding rate of decline."

The metropolitan area (-0.69%) and provinces (-0.43%), which had hoped for a turnaround due to deregulation benefits, are seeing continued expansion in the rate of decline. Apartment prices in Gyeonggi-do fell by 0.71% this week, and Incheon by 0.94%, both showing larger drops than last week.

Similarly, Sejong City, which was deregulated, saw its decline widen from -0.64% last week to -0.77% this week, continuing the largest drop in history.

The jeonse market is also continuing its slump.

Jeonse prices nationwide (-0.69%), in the metropolitan area (-0.95%), and in Seoul (-0.89%) are all experiencing the largest consecutive declines ever recorded.

The Real Estate Agency explained, "Due to the burden of loan interest from continuous base rate hikes, jeonse demand is shifting to monthly rent, and existing sale properties are being converted to jeonse, deepening the inventory backlog," adding, "Declining transactions and price adjustments of listings are steadily progressing, with the rate of decline expanding compared to last week."