Apartment Listings Increase and Transactions Rise... But Price Growth Uncertain [Seoul Housing Prices Where To]③

Seoul Apartment 'Transaction-to-Listing' Ratio Rises
Usually, a Higher Ratio Is Interpreted as Price Increase

But Now It's Different from the Past
Listings Also Greatly Increase, Seoul Apartment Price Polarization, Transaction Volume Maintenance Uncertain
"Hard to Assert Apartment Prices Will Rise"

More than half of the jeonse prices for the 'standard apartment size' in Seoul this year have exceeded 600 million won. On the 5th, a jeonse and sale price list was posted at a real estate office in Seoul. Photo by Kang Jin-hyung aymsdream@

"Let's buy a house before it's too late." As apartment transactions in the Seoul area become more active, the ratio of transactions to the number of apartment listings has shown an increasing trend. In the past, it was rare for a sale to be completed once a house was put on the market, but now it happens more frequently. Since an increase in transaction volume leads to price rises, if this trend continues, housing prices are likely to trend upward in the second half of this year.

However, there are variables such as many homeowners putting their houses on the market to take advantage of rising prices, and the polarization phenomenon where only certain areas see price increases. Experts caution that it is premature to expect housing prices to rise in line with this ratio as in the past.

On the 18th, based on data from the real estate big data company ‘Asil’ and the Seoul Real Estate Information Plaza, the ratio of apartment transactions to listings (monthly average) in Seoul was examined. In January last year, this ratio was only 3% (1,492 transactions out of 50,985 listings). However, by June this year, it rose to 7% (5,486 transactions out of 83,371 listings). Compared to early last year, listings increased by more than 30,000, and transactions rose by about 4,000.

Listings Increase Rapidly Along with Transactions

A KB Real Estate official explained, "Due to long-term concerns about supply shortages and instability in jeonse (long-term deposit lease) prices, actual demand buyers are participating in purchases, increasing transaction volume," adding, "On the other hand, the burden of high interest rates is steadily increasing listings."

Typically, when transaction volume rises, sale prices also increase accordingly. The official analyzed, "Until 2020, at the tail end of the adjustment period, prices rose as transaction volume increased. However, from mid-2021, as transaction volume rapidly contracted, the rate of price increase also slowed."

He added, "Last year, transaction volume clearly increased near the point where sale prices formed a bottom, and in the first half of this year, as sale prices entered a rebound phase, transaction volume became active again."

Actual Buyers Able to Purchase High-Priced Apartments Will Be Limited

Considering the recent trend of increasing apartment listings in Seoul and the polarization of housing prices, some opinions suggest that it cannot be asserted that increased transaction volume will lead to price rises. Kim Hyoseon, Senior Real Estate Specialist at NH Nonghyup Bank, pointed out, "If listings do not increase but transaction volume does, housing price increases can be expected, but currently listings are also rapidly increasing." This means that many people are putting their houses on the market, making it difficult for prices to rise easily.

He diagnosed, "Even within Seoul, there are areas like the Gangnam 3 districts, Mapo-gu, and Seongdong-gu where prices have risen enough to trade at asking prices, and areas like Nodogang (Nowon, Dobong, Gangbuk) where transactions are mainly of low-priced listings. For these reasons, it is difficult to expect apartment prices to rise following increased transaction volume as in the past."

The government also stated uncertainty about how long demand for Seoul apartment sales will be sustained. A senior official from the Ministry of Land, Infrastructure and Transport said, "It appears that sales demand has temporarily increased as buyers brought forward their purchase timing due to concerns about future supply shortages and reduced loan limits," adding, "The demand able to afford houses priced at 2 to 3 billion KRW is limited, so Seoul apartment transaction volume is expected to gradually decrease in the future."