Is It the Effect of the 1·3 Measures?... Decline in Seoul Reconstruction Apartments Slows Down

View of apartment complexes in Seoul city from Seoul Sky, the observation deck of Lotte World Tower in Songpa-gu, Seoul. Photo by Yonhap News

[Asia Economy Reporter Ryu Tae-min] Although a month has passed since the announcement of the 1.3 measures, the downward trend in the metropolitan area apartment market continues. However, it has been observed that the decline in prices of reconstruction apartments has narrowed as inquiries for purchasing early-stage reconstruction apartments have increased in some areas such as Nowon and Gangnam.

According to Real Estate R114 on the 5th, apartment prices in Seoul fell by 0.09% this week. General apartments fell by 0.10%, an increase of 0.04 percentage points from the previous week, while reconstruction apartments fell by only 0.03%, a decrease of 0.02 percentage points from the previous week. During the same period, new towns fell by 0.04%, and Gyeonggi and Incheon fell by 0.08%.

Yeokyunghee, senior researcher at Real Estate R114, said, "Due to the easing of safety diagnosis regulations, inquiries for purchasing early-stage reconstruction apartments in Nowon and Gangnam areas have increased, narrowing the decline in reconstruction apartment prices this week. However, the sluggish transactions continued due to a standoff between sellers who want to maintain their asking prices in anticipation of regulatory easing and buyers waiting for prices to fall further."

In Seoul, prices fell in 19 out of 25 districts. Due to the impact of apartment move-ins, the decline widened in areas such as Gangnam and Dongjak. By region, the prices fell in the order of ▲Guro (-0.26%) ▲Gangnam (-0.25%) ▲Seongbuk (-0.22%) ▲Eunpyeong (-0.16%) ▲Jung-gu (-0.15%) ▲Gwanak (-0.12%). In Guro, apartments such as Sindorim-dong Sindorim 4th e-Pyeonhansesang and Gaebong-dong Gaebong Prugio dropped by 30 million to 50 million KRW. In Gangnam, Daechi-dong Seon-gyeong 1st and 2nd complexes and Raemian Daechi Palace 1st complex fell by 25 million to 50 million KRW.

New towns mainly in the first phase declined. By region, prices fell in ▲Ilsan (-0.09%) ▲Pyeongchon (-0.09%) ▲Sanbon (-0.09%) ▲Dongtan (-0.09%) ▲Bundang (-0.03%), while other areas remained flat (0.00%). In Ilsan, apartments such as Madu-dong Gangchon 2nd Hanshin and Baekseok-dong Baeksong 5th Samho Poonglim dropped by 10 million to 25 million KRW. In Pyeongchon, Pyeongchon-dong Guin Village Hyundai Hometown and Hogye-dong Mugunghwa Gyeongnam fell by 5 million to 25 million KRW.

In Gyeonggi and Incheon, prices were adjusted downward mainly in large apartment complexes with many listings. By region, prices fell in the order of ▲Anyang (-0.24%) ▲Yongin (-0.16%) ▲Suwon (-0.15%) ▲Incheon (-0.12%) ▲Seongnam (-0.10%) ▲Paju (-0.08%). In Anyang, Samsung Raemian in Bisan-dong fell by 10 million to 35 million KRW. In Yongin, apartments such as Dongcheon-dong Yongin Dongcheon Xi, Pungdeokcheon-dong e-Pyeonhansesang Suji, and Seongbok-dong Seongbok Station Lotte Castle Gold Town dropped by 5 million to 15 million KRW.

The jeonse (long-term deposit lease) market also shows signs of a slowdown in the rate of price decline. In Seoul, prices fell by 0.17%. New towns and Gyeonggi-Incheon fell by 0.12% and 0.11%, respectively. Researcher Yeokyunghee added, "As both sales and jeonse prices have been falling for a long time, concerns about 'empty jeonse' and 'reverse jeonse' are increasing."