[Urgent Mid-Year Real Estate Market Check]
High Interest Rates Dampen Buying Sentiment
Inventory Backlog Expected to Worsen Temporarily
The number of apartment listings in Seoul has surpassed '80,000' for the first time. After home prices plummeted during the winter, they have risen for 24 consecutive weeks, leading to a continuous increase in sellers. However, due to prolonged high interest rates, buyers have turned cautious and are holding back. As the conflicting interests of buyers and sellers deepen, it is expected that the backlog of listings will worsen for the time being.
According to the real estate big data platform Apartment Real Transaction Price (hereafter Asil) on the 3rd, the total number of apartment sale listings in Seoul was recorded at 80,452. This is the highest figure since Asil began compiling these statistics in November 2020. Compared to 50,513 listings at the beginning of this year, this represents an increase of 59.3% (29,939 listings) in about 10 months. Even compared to just one month ago, it rose by 14.1% (9,987 listings). Among the 24 autonomous districts in Seoul, 22 districts except Jongno-gu and Songpa-gu saw an increase rate of over 10%.
The sharp backlog of apartment listings in Seoul can be simply attributed to the conflicting interests of sellers and buyers. Sellers are lining up quickly, but buyers are unable to keep pace and are just watching.
The core reason for this cautious stance is price. There is a significant gap between the asking prices of sellers and buyers. Seoul apartment prices sharply declined in the second half of last year due to the impact of high interest rates originating from the U.S., but they quickly recovered early this year thanks to government deregulation. According to the Korea Real Estate Board, Seoul apartment prices have risen for 24 consecutive weeks as of the 5th week of October. The actual transaction price index for Seoul apartments from January to August recovered 12.4%, which is half of last year's total decline (-22.2%). Accordingly, sellers want to sell their homes at the increased prices.
On the other hand, buyers find these prices burdensome. Recently, with a surge in household loans, the government has tightened lending through measures such as the Special Home Loan Program, and concerns over prolonged high interest rates have increased the burden of financing. The upper limit of fixed mortgage loan interest rates at some banks has already exceeded 7% per annum.
Ye Gyeong-hee, Senior Researcher at Real Estate R114, explained, "The increase in loan interest rates has raised interest burdens, and government loan restrictions have worsened financing conditions, significantly dampening buyer sentiment."
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