"Seoul Housing Prices: Temporary Rise, Not Recovery - Interview with 4 Experts [Urgent Housing Price Check]"

Interview with Four Real Estate Experts
"It is premature to use the term 'recovery'"

"It is not a recovery phase but a temporary upswing"
"It is difficult for a major upward trend like in the past to come"
"Although trading volume has increased, it still does not reach the average level"
"It can only be said that house prices are unlikely to fall sharply rather than rising"

The number of apartment transactions in Seoul has exceeded 4,000, and with rising sale prices, real estate agencies near major apartments have evaluated that "the real estate market is coming back to life." On the other hand, real estate experts diagnosed on the 11th that "it is premature to use the term ‘recovery’ for the real estate market." Their analysis is that there is a limit to the increase in transaction volume centered on actual demand without investment demand as it is now, and sale prices are still at a level lower than the peak.

Jang Jaehyun: "Temporary rebound, actual demand transactions"

Jang Jaehyun, head of the Research Division at RealToday, drew a line by saying that the recent rise in Seoul apartment prices is a "temporary phenomenon." Director Jang explained, "It seems like a rebound, but there is a possibility of a decline again over time," and "Only when transaction volume increases significantly and the price rise is substantial every week can it be called a recovery phase."

Above all, he said that the market cannot be considered recovered with transactions centered on actual demand. He diagnosed, "Transaction volume can increase significantly only if investment demand supports it, but recently the market is characterized by transactions centered on actual demand," and "The fact that young people can borrow money at low interest rates through newborn special loans and first-time homebuyer loans is a factor that can increase transaction volume, but the overall market atmosphere is still gloomy."

He pointed out that when new apartments are supplied in a situation with low transaction volume, an ‘optical illusion’ may occur where sale prices appear to have risen. For example, when new apartment move-ins begin in Gangnam, the high pricing of these apartments causes the asking prices of surrounding apartments to rise as well. Even if transactions do not occur, actual transaction prices can rise due to the increase in asking prices. Director Jang emphasized, "It is unreasonable to judge the current market because there are various variables in a situation where transaction volume is not high."

Ham Youngjin: "House prices expected to stay in a box range, influenced by rising jeonse prices"

Ham Youngjin, head of the Real Estate Research Lab at Woori Bank, also analyzed that although Seoul apartment prices have rebounded, the rise has not fully started. He said, "The cumulative price increase rate of Seoul apartments is still at a level lower than the peak," and "The weekly price rise trend continues to the extent that it can be judged that house prices will not fall."

He said the recent rise in house prices is due to high pre-sale prices, decreased supply of Seoul apartments, and the impact of rising jeonse prices. Lab head Ham explained, "Recently, construction cost increases have raised pre-sale prices, and new apartment supply has been delayed or reduced, making it difficult for demand to disperse to the pre-sale market," and "For these reasons, Seoul apartment prices seem to be rising." He also mentioned, "Rising jeonse prices also have the effect of pulling up sale prices."

Nevertheless, Lab head Ham focused on the fact that transaction volume is not high. He predicted, "Although house prices have risen, there are not many urgent sales, so transaction volume is not higher than in the past," and "In the current situation, prices are expected to stay in a box range, repeatedly rising and stopping."

Kwon Youngsun: "House prices are firm, lack of investment demand"

Kwon Youngsun, a real estate analyst at Shinhan Bank, predicted, "The rise in the Seoul apartment sales market this year will remain firm without a large increase." He said, "In a situation where Seoul apartment supply is constrained, transactions seem to be centered on actual demand," and "In a market centered on actual demanders, the price rise will not be large."

Analyst Kwon said, "The recent rise in house prices is the result of increased buyers choosing to purchase rather than jeonse due to rising jeonse prices and concentrated demand for jeonse." He also analyzed, "Seoul apartments are considered safe assets compared to provinces, so there is demand from provinces as well."

He especially viewed that investment demand is unlikely to increase. He said, "Recently, transactions have increased not only in Gangnam-gu, Seocho-gu, and Songpa-gu but also in Seongdong-gu, Mapo-gu, and Gwangjin-gu, while transactions in Gangbuk-gu are sluggish, suggesting a perception of investing in certain reliable areas," and "In such a situation where buyers are watching the market, it is difficult for investment demand to follow, so transaction volume is unlikely to increase."

Park Wongab: "Difficult for a major upward trend to come"

There is also a forecast that a major upward trend will be hard to come in the future. Park Wongab, senior real estate expert at KB, predicted that it will be difficult for transaction volume to increase further and for house prices to rise. Park said, "The recent Seoul apartment sales market is a temporary rebound rather than a recovery phase," and "With Seoul house prices basically at 1.2 billion KRW, transaction volume can only reach about 4,000 cases at best. It is difficult to increase beyond this."

In particular, Park said, "It is uncertain whether a major upward trend through gap investment like before will come," and "From 2013 to 2022, there was a major upward trend for nine years, but it is difficult to expect such a long-term rise going forward." He added, "In 2016, when gap investment was rampant, the jeonse rate was at its highest at 75%, but now it is around 53%," calling the current market a temporary rebound phase.

Park also judged, "Saying that house prices are recovering is following the past major upward trend," and "In a situation where the population is decreasing, it is difficult for transactions to revive as in the past."