In 8 Months... Apartment Transactions Surpass Last Year's Total Volume

Apartment Transactions in Seoul from January to August Total 36,115
Housing Supply Shortage and Rising Jeonse Prices Stimulate Purchases
Jeonse Prices Rise for 65 Consecutive Weeks, Expansion to Guchuk

From January to August this year, the volume of apartment sales transactions in Seoul has caught up with the total transaction volume for the entire previous year. This is a result of transactions not decreasing even during the off-season summer months. Due to a shortage of new housing supply and the continued rise in jeonse prices, buyers' purchasing sentiment is being stimulated, and the volume of sales transactions is expected to increase further.

On the 5th, apartment sale and jeonse prices are posted in the real estate area of Mapo-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

According to the Seoul Real Estate Information Plaza on the 21st, the total number of apartment sales transactions in Seoul from January this year to the 20th of this month was 36,115, surpassing last year's annual transaction volume of 35,538.

The proportion of apartment transactions within the total housing transactions, including non-apartments, has also increased. This year, the share of apartment transactions in Seoul reached 59.5%. This exceeds last year's share of 50.6%, approaching the 60% range. The total housing transactions in Seoul, including villas and others, amounted to 60,727, which is more than 10,000 fewer than last year's 70,162.

As transactions increase, complexes setting new record prices are emerging one after another. Newly built apartments in highly preferred residential areas are considered the main drivers of price increases. According to Asil, the districts with the highest increase in the sales price index over the past month were Songpa-gu (1.82), Gangdong-gu (1.66), Gwangjin-gu (1.46), and Mapo-gu (1.3), in that order.

At Jamsil Resence, an 84㎡ unit was sold for 2.66 billion KRW earlier this month, setting a new record price. In Mapo-gu, a Mapo Prestige Xi 84㎡ unit was traded on the 13th for 2.24 billion KRW. This transaction occurred at a price 55 million KRW higher than the same size unit sold earlier this month. The Mapo Raemian Prugio 114㎡ also set a new record price this month at 2.45 billion KRW.

A newly built apartment complex in Seoul. Photo by Jinhyung Kang aymsdream@

The volume of apartment transactions is likely to increase further. Last month, despite the reporting period still being open, apartment transactions reached 8,173, the highest so far this year. June recorded 7,482 transactions, the second highest. Housing transactions exceeded 10,000 for two consecutive months, with 10,098 in June and 11,666 last month.

Buyer sentiment is also gradually improving. Demand for switching homes and expectations of rising house prices have increased. According to the Korea Real Estate Board, the Seoul sales price index rose by 0.76% in July. According to the Korea Research Institute for Human Settlements, the housing market (sales + jeonse) consumer sentiment index in the metropolitan area was 119.4 in July, up 4.9 points from the previous month. The housing sales market consumer sentiment index was 130.9 in the metropolitan area and 140.6 in Seoul, increasing by 8.0 points and 7.6 points respectively compared to the previous month.

In particular, Seoul's jeonse prices have been rising for 65 consecutive weeks and are likely to continue increasing. The rise in jeonse prices can stimulate sales transactions by prompting tenants to switch to buying homes. According to the Korea Real Estate Board's housing price trends, the jeonse price index change rate in July was 0.54%, a larger increase than the previous month’s 0.38%. The rise in jeonse prices is expanding even to older apartments. Notable increases were seen in Seongdong-gu (1.17%), Nowon-gu (1.05%), and Yeongdeungpo-gu (1.05%). Due to a shortage of upcoming move-in units, the upward trend in jeonse prices is likely to continue. According to Real Estate R114, the scheduled move-in volume in Seoul for the second half of this year is expected to be 19,235 households, and next year's move-in volume is projected to be slightly higher at 24,630 households.

Doosung Kyu, head of the Mokmin Economic Policy Research Institute, said, "In Seoul, a shortage of supply is expected over the next three years, leading to a decrease in move-in volumes, which is increasing anxiety among actual buyers. The government's failure to present a clear solution in the recent August 8 measures is also a factor prompting buyers to hurry. Although June to August is usually considered an off-season, transaction volumes have exploded, and many actual buyers have been active. While there may be a slight pause, if the autumn moving demand coincides, a clear upward trend could emerge," he analyzed.