NH Investment & Securities "Real Estate Near Bottom... Rebound Is Temporary Phenomenon"

Real Estate Report Publication
"Difficult to View as a Trendual Rise"

NH Investment & Securities analyzed on the 8th that the real estate market can be seen as having reached its bottom, but the recent rebound may be a temporary phenomenon due to regulatory easing.

NH Investment & Securities stated this in its real estate report titled 'Post 1·3 Measures Housing Market Rebound: Bottom Reached vs Temporary.' The full report can be found on the official NH Investment & Securities blog.

While the decline in apartment sale prices has continued recently, after the announcement of the '1·3 Real Estate Measures,' the rate of decline has slowed, and in some apartment complexes in areas with excessive price drops such as Songpa, Nowon, Dobong, and Gangbuk, price rebounds have appeared in transactions.

The primary evidence for reaching the bottom was an increase in transaction volume. In Seoul, apartment sale transaction volume, which hit a record low in November last year, reached 1,400 cases in January (based on reports up to February 27), marking the highest figure since the second half of last year.

National transaction volume also increased compared to the fourth quarter of last year. Additionally, the sales supply-demand index, which had been declining, began to rebound at the beginning of the year, and the slowdown in the rate of base interest rate hikes were also analyzed as signals of having reached the bottom.

On the other hand, indicators such as the expected increase in supply volume compared to the previous year and the continuous rise in unsold units were cited as factors suggesting that the recent rebound transactions may be temporary.

Furthermore, the continued decline in jeonse prices, an indicator supporting sale prices, was analyzed to likely affect the decline in sale prices. Jeong Bohyun, Senior Researcher of Real Estate at NH Investment & Securities Tax Center (NH WM Masters Specialist), explained, "Demand is recovering faster than expected, but concerns about stagnation in supply factors remain, and until this is resolved, the current market atmosphere is expected to continue," adding, "There is uncertainty in viewing the recent rebound as a trend direction." However, he added that the possibility of a soft landing in the market has increased.

Jung Yuna, Senior Researcher at NH Investment & Securities, stated, "If transaction volume increases and rebound transactions continue during the first half of this year, the bottom-reaching process is expected to accelerate."

Meanwhile, NH Investment & Securities analyzed that the effective response strategy in the current market is trading up. The price drop in higher-tier apartments is significant, reducing the price gap in transactions, and due to the overall decrease in transaction amounts and regulatory easing, taxes are also reduced, lowering the cost of trading up compared to a rising market.

In the case of a single-homeowner trading up from Godeok Gracium to Jamsil Els, additional costs required in October 2021 were about 1.1 billion KRW, but in February this year, it was calculated to be about 660 million KRW, allowing for a cost reduction of over 400 million KRW.