The Trade Cliff Reopens... 'House Price Increase Slows and Listings Accumulate'

An unusual trend is emerging in the Seoul apartment transaction market, which had been showing signs of recovery this year. The rate of apartment price increases is slowing down, and the volume of sales transactions is decreasing. However, buyers remain cautious, and it is expected that the ‘transaction cliff’ phenomenon caused by a tug-of-war between buyers and sellers will continue for the time being.

View of apartment complexes in Seoul city from Lotte World Tower Seoul Sky in Songpa-gu, Seoul. Photo by Jinhyung Kang aymsdream@

According to the Seoul Real Estate Information Plaza on the 29th, the number of apartment transactions in Seoul last month was recorded at 3,355, a decrease of about 13% compared to the previous month (3,849 transactions). The decline in transaction volume has become even more pronounced this month. As of this day, the recorded transaction volume is 955, and it is expected that the volume will decrease further compared to September.

Although transaction volume is decreasing, listings are accumulating. According to Asil, a real estate big data company, the number of apartment listings in Seoul increased by about 52%, from 50,513 units at the beginning of the year (as of January 1) to 76,612 units as of October 28.

The proportion of rising transactions is also decreasing. According to a survey by Zigbang, as of the 22nd of October, the proportion of rising apartment transactions in Seoul was 45.88%. This is the first time in five months that it has fallen below 50%. On the other hand, the proportion of falling transactions rose to 36.94%, up from 32.50% in September.

The Bank of Korea’s ‘October Consumer Sentiment Survey’ also detects a downward trend in housing. The Housing Price Expectation CSI, which had been rising every month this year, began to decline starting in October. The Housing Price Expectation CSI dropped 2 points from 110 in September to 108 in October. This can be interpreted as consumers’ perception that housing prices will rise weakening for the first time in about a year.

In fact, according to the ‘Weekly Apartment Price Trends Nationwide for the Fourth Week of October’ released by the Korea Real Estate Board, Seoul’s apartment prices rose by 0.07%, marking the 23rd consecutive week of increase, but the rate of increase narrowed compared to the previous week (0.09%).

The upward trend has slowed not only in Gangnam (0.10% → 0.03%), Seocho (0.08% → 0.06%), and Songpa (0.12% → 0.10%), which had led the price increases, but also in Mapo (0.12% → 0.10%), Yongsan (0.15% → 0.14%), and Gangdong (0.15% → 0.14%).

Experts analyze that the cautious stance has deepened due to fatigue from price increases, the suspension of the special Bogeumjari loan, and soaring loan interest rates again.

A Korea Real Estate Board official said, "Transactions centered on actual demand are continuing mainly in areas and complexes where the rate of increase was relatively small, but a mixed trend is emerging as buyers remain cautious due to the gap in desired transaction prices between sellers and buyers."