Last Year's Record Low
Impact of Interest Rate Hikes and Resale Restriction Regulations
[Asia Economy Reporter Minyoung Kim] Last year, the volume of apartment move-in and pre-sale right transactions in Seoul fell below 70, marking an all-time low. The continued interest rate hikes and concerns over further declines in housing prices have dampened buying demand, and regulations on the resale of move-in and pre-sale rights also appear to have had an impact.
According to an analysis of data from the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system by real estate research firm Realtoday on the 24th, the number of apartment move-in and pre-sale right transactions in Seoul last year was recorded at 68, the lowest since related statistics began in 2007.
This figure peaked at 9,948 transactions in 2016, then declined annually to 8,652 in 2017, 2,532 in 2018, and 2,114 in 2019. In 2020, it dropped to triple digits at 894, followed by 264 in 2021, and only 68 transactions last year.
Looking at the complexes where move-in and pre-sale rights were traded in Seoul last year, in March, a move-in right for an 84㎡ (18th floor) unit at "Raemian One Bailey" in Banpo-dong, Seocho-gu, was sold for 3.87407 billion KRW, marking the highest price transaction. A move-in right for a 97㎡ (15th floor) unit at "The H Firstier I-Park" in Gaepo-dong, Gangnam-gu, was sold for 3.31184 billion KRW in March last year.
In addition, move-in and pre-sale rights were traded for complexes such as "Gongdeok Xi" and "Mapo The Classy" in Ahyeon-dong, Mapo-gu; "DMC Central Xi" in Jeungsan-dong, Eunpyeong-gu; "Hongje Station Harrington Place" in Hongje-dong, Seodaemun-gu; and "Gaepo Presidents Xi" in Gaepo-dong, Gangnam-gu.
Last year, the apartment move-in and pre-sale right markets in Gyeonggi and Incheon also experienced similar stagnation. In Gyeonggi, the number of transactions exceeded 10,000 annually for seven consecutive years from 2014 with 10,259 transactions, but dropped to 6,846 in 2021 and halved to 3,316 last year. In Incheon, transactions plunged 58% from 3,970 in 2021 to 1,667 last year.
Kim Woongsik, a research fellow at Realtoday, said, "The ongoing interest rate hikes have cooled the existing housing sales market, which seems to have affected the pre-sale right market as well. The strong regulations on the resale of pre-sale rights have also had a significant impact."
Although the government decided earlier this month to ease restrictions on the resale of pre-sale rights retroactively to existing pre-sale complexes, it seems difficult for transactions to increase due to interest rates.
Researcher Kim said, "Since pre-sale right transactions also require loans, unless the interest rate issue is resolved, the transaction volume is unlikely to increase dramatically."
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