January Seoul Apartment Transactions Up 40% Month-on-Month... Has the Bottom Been Reached?

Last Month's Seoul Apartment Transactions 1,173
US Interest Rate Hike Issue Persists
Experts Say "Hard to See It as Bottomed Out"

[Asia Economy Reporter Minyoung Kim] Last month, the volume of apartment transactions in Seoul exceeded 1,000 units for the first time in eight months, showing signs of a slight easing of the transaction freeze. Opinions are divided on whether this indicates that the housing market has bottomed out or if it is a temporary phenomenon due to regulatory easing effects. Experts analyze that although the transaction volume has improved compared to the end of last year, it still falls short of the average level, and with the ongoing issue of U.S. interest rate hikes, it is necessary to observe a bit longer to determine if the market has truly bottomed out.

[Image source=Yonhap News]

According to the Seoul Real Estate Information Plaza on the 15th, the volume of apartment transactions in Seoul last month was 1,173 units as of the 14th, a 40% increase from the previous month (837 units). This is the highest figure in eight months since June last year (1,738 units). The volume of apartment transactions in Seoul had dropped to 559 units in October last year but has increased for three consecutive months since then. Considering that the reporting deadline is about two weeks away, the transaction volume for January is expected to rise further.

The auction market also shows a trend where low-priced properties are being consumed mainly by actual buyers compared to the end of last year. According to the court auction information company Gigi Auction, the winning bid rate (the ratio of successful bids to auction cases) for Seoul apartments last month was 44%, up 26.1 percentage points from the previous month. The winning bid price ratio (the ratio of the winning bid price to the appraised price) also rose to 78.7% from 76.5% the previous month.

Senior researcher Juhyun Lee of Gigi Auction said, "Properties that had failed to sell two to three times accumulated and were then consumed mainly as low-priced items," adding, "Currently, the auction market is moving mainly with actual buyers rather than investors, so it is difficult to say that the auction market has fully revived."

Some expect the transaction volume to increase further in February. If the regulatory easing effects from the 1·3 measures influenced January's transaction volume, this month is expected to see a transaction-inducing effect from the Special Home Loan program. Yoon Jihae, research team leader at Real Estate R114, said, "Since January's transaction volume reflects the 1·3 measures, the transaction volume is likely to increase significantly in February when the effect of the Special Home Loan program is amplified, making it more likely that the market will bottom out," adding, "It can be interpreted as an increased possibility of a soft landing."

However, the prevailing view is that it is too early to say the market has bottomed out based on the slight increase in transaction volume. Won-gap Park, senior real estate specialist at KB Kookmin Bank, said, "Some adventurous investors have started buying at low points due to expectations of regulatory easing and falling loan interest rates," but added, "This should be seen as a process of absorbing supply rather than a reversal to an upward trend, and with the possibility of additional base rate hikes in February, the real estate market remains on thin ice."

Housing prices are still declining. According to the Korea Real Estate One, as of this week (6th), apartment prices in Seoul fell by 0.31% in one week. The decline widened compared to the previous week (-0.25%). After the announcement of real estate measures last month, including the lifting of regulation zones, the rate of decline had narrowed for five consecutive weeks but has now widened again.

Ham Youngjin, head of the Big Data Lab at Zigbang, said, "Recently, with the pause in U.S. interest rate hikes, the lifting of domestic regulation zones, the allowance of loans exceeding 1.5 billion won, and the launch of the Special Home Loan program, it seems that some urgent sales in parts of Seoul have been consumed," adding, "Although the price fluctuation rate is still declining and transaction volume has improved compared to December last year, it still does not reach the average level, so it is necessary to observe a bit longer to determine if the market has bottomed out."

This content was produced with the assistance of AI translation services.