Seller withdraws listings or hesitates to trade
Meanwhile, buyers face heavy interest burden due to persistently high interest rates
"There may be a temporary increase in transactions, but activation is still pending"
"One side is waiting for housing prices to drop, while the other sees deregulation as a positive and is holding out, so transactions just can't happen." (An official from real estate agency A in Nowon-gu, Seoul)
Although the government has launched large-scale deregulation measures to overcome the severe real estate transaction freeze, the atmosphere remains one of 'different dreams in the same bed' between buyers and sellers. As long as high interest rates persist, only low-priced urgent sales are expected to be absorbed, making transaction activation difficult.
According to the real estate industry on the 8th, expectations are growing that the real estate market will revive following the removal of all areas except the three Gangnam districts and Yongsan-gu in Seoul from regulated zones on the 5th. With the loan-to-value ratio (LTV) for mortgage loans expanded to 70% in all areas of Seoul except four districts, as well as in Gwacheon and Bundang and Sujeong districts of Seongnam, Hanam, and Gwangmyeong in Gyeonggi Province, buying demand is expected to increase.
Amid expectations of deregulation, this week’s apartment sales supply-demand index in Seoul rose by 1 point to 64.1 from 63.1 last week. This is the first time in eight months (35 weeks) since the first week of May last year (91.1) that the Seoul apartment sales supply-demand index has turned upward. The sales supply-demand index is based on 100, and a figure below this means there are more sellers than buyers in the market.
In fact, according to local real estate agencies in deregulated areas, there have been reports of increased buyer inquiries recently. An official from real estate agency B in Gangdong-gu said, "With successive deregulations, inquiries about low-priced urgent sales have noticeably increased."
However, the conflicting expectations between sellers and buyers are said to be hindering transactions. Sellers view the government's deregulation as a positive and are withdrawing urgent sale listings or hesitating to make contracts, while buyers are still waiting for housing prices to fall further amid the high interest rate environment. Currently, mortgage loan interest rates at commercial banks have risen to as high as the 8% range. The official from agency B explained, "Interest rates are already high and may rise further, so even if regulations are lifted, it is still difficult to buy a house with a loan."
Experts also predict that no matter how much the government deregulates, if high interest rates continue, transaction volumes may temporarily rise centered on urgent sales, but this will not lead to overall transaction activation. Park Won-gap, Senior Real Estate Specialist at KB Kookmin Bank, said, "Sellers are withdrawing listings due to expectations of deregulation, but buyers are placing more weight on high interest rates and economic recession," adding, "Transactions may occur mainly in urgent sales, but transaction activation or housing price rebounds will be difficult for the time being."
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