Seoul Apartment Prices Up 30% in a Month During Trading Freeze... "Illusion of Quick Sale Depletion"

Despite Government Efforts to Restore Trading Volume, Outlook Divided
"Severe Cliff Crisis Continues" vs "Will Be Higher Than Last Year"

[Asia Economy Reporter Kim Hyemin] The volume of apartment sales transactions in Seoul, which had entered a missing state beyond a transaction cliff, increased by about 30% within a month. This is interpreted as an optical illusion caused by the depletion of urgently discounted properties. Experts have presented conflicting views, with some saying it is difficult to see this as a signal of transaction volume recovery, while others predict a shift to an increasing trend.

According to the Seoul Real Estate Information Plaza on the 3rd, the confirmed volume of apartment sales transactions in Seoul as of November last year was 729 cases. The real estate reporting deadline is within 30 days after the transaction, so the final transaction volume is usually confirmed two months later. The transaction volume for December, which still has about a month left for the reporting deadline, is currently counted at 485 cases.

Although the November transaction volume also fell below 1,000 cases, it is the largest scale in five months. Seoul apartment transaction volumes decreased to 669 cases in August, 608 cases in September, and hit a record low of 559 cases in October. Considering this, the volume increased by 30% within a month.

This short-term increase in listings is generally understood to be partly due to a large number of urgent or super-urgent sales entering the market and being traded. Despite the increase in transaction volume, sales prices did not rebound. In fact, according to the Ministry of Land, Infrastructure and Transport’s real transaction price disclosure system, most cases were traded at prices lower than previous transactions. For example, the Helio City apartment in Garak-dong, Songpa-gu, with an exclusive area of 85㎡, was traded at 2.2 billion KRW until August last year but recorded a new low of 1.66 billion KRW in November. The housing price index also continues to decline. According to the Korea Real Estate Board, the Seoul apartment sales price change rate fell by 2.06% in November, widening the decline compared to the previous month (-1.24%).

However, opinions differ among experts on whether the November transaction volume should be seen as a gradual recovery signal or a temporary increase.

Professor Seo Jin-hyung of Gyeongin Women’s University said, "The transaction cliff crisis will continue this year," and predicted, "Seoul’s transaction volume will not exceed 1,000 cases per month." He added, "For transaction volume to recover, the tax burden must be reduced, but although the government is easing regulations, it is difficult to pass laws in the current political situation where the ruling party is in the minority. Multi-homeowners are also withdrawing listings because they have nothing to gain, and buyers are maintaining a wait-and-see stance due to high interest rates."

On the other hand, Yoon Ji-hae, chief researcher at Real Estate R114, forecasted, "Transaction volume will increase this year compared to last year," adding, "Although it is difficult for Seoul to return to the transaction volume of 2020-2021, it can recover to the 10-year average of 3,000 to 4,000 cases per month." She explained, "Unlike stocks, real estate has residential relocation demand, interest rates have entered an adaptation period, and housing prices have fallen, reducing price resistance compared to last year. The government is also easing regulations to help recover transaction volume, so there is room for an upward turn."

However, the recovery in transaction volume is not expected to lead to a rise in housing prices. Chief researcher Yoon said, "Transactions are mainly centered on urgent sales, which means prices will fall further. Last year, prices fell without transactions, but this year, prices are likely to fall even with transactions. Once urgent sales are resolved over a certain period, the market may enter a phase of price stabilization."