'Pause for Now'... Seoul Apartment Market Dominated by Wait-and-See Sentiment

Loan Limit Regulations and Impeachment Crisis Hit
Seoul Apartment Sale Price Increase Narrows Again
Seoul Apartment Jeonse Prices Also Stop Rising After 1 Year 7 Months

Seoul Walking Column - A residential complex in downtown Seoul where apartments and houses coexist. Photo by Yongjun Cho jun21@

The nationwide real estate market is experiencing a wait-and-see trend as loan limit regulations and the impeachment political turmoil hit simultaneously. Apartment sale prices across the country have fallen for five consecutive weeks. The rise in apartment prices in Seoul is slowing down. Due to the impact on the sales market, the jeonse (long-term lease) market is also showing mixed trends, with Seoul's jeonse prices halting their upward trend for the first time in 1 year and 7 months.

According to the weekly apartment price trend for the third week of December (as of the 16th of this month) announced by the Korea Real Estate Board on the 19th, apartment sale prices nationwide fell by 0.03% compared to the previous week. Nationwide apartment prices have been declining since the third week of November.

Seoul (0.02%→0.01%) showed an upward trend, but the rate of increase has been shrinking every week. Dongdaemun-gu (-0.02%), Eunpyeong-gu (-0.02%), Gangdong-gu (-0.01%), and Dongjak-gu (-0.01%) continued their downward trend from the previous week. Dobong-gu (-0.01%), Guro-gu (-0.01%), and Geumcheon-gu (-0.01%) also shifted to a downward trend starting this week.

An official from the Korea Real Estate Board stated about the Seoul apartment sales market, "There are steady purchase inquiries and rising transactions in preferred complexes such as reconstruction or new buildings, but in other complexes, the buyer's wait-and-see stance continues."

Amid shrinking buyer sentiment, Incheon (-0.05%→-0.09%) saw a larger decline. Gyeonggi Province (0.00%→0.01%) showed mixed trends depending on the region and complex but rose slightly. The metropolitan area (0.00%→0.00%) remained flat following the previous week.

The provinces fell by 0.05%, the same as the previous week. The five major metropolitan cities (-0.06%), eight provinces (-0.04%), and Sejong (-0.05%) all recorded the same rate of decline as the previous week.

According to the KB Real Estate Weekly KB Apartment Market Trend report, last week Seoul apartment sale prices surged by 0.22% in just one week. On the 5th, apartment sale and jeonse prices were posted in the real estate market of Mapo-gu, Seoul. Photo by Jinhyung Kang aymsdream@

The jeonse market also stopped its upward trend. The change rate of jeonse prices nationwide and in Seoul recorded flat (0.00%), remaining steady. This is the first time in 46 weeks since the first week of February that nationwide jeonse prices have stopped rising. For Seoul, it is the first time in 83 weeks since the fourth week of May last year.

An official from the Korea Real Estate Board explained, "There is a significant temperature difference by region in Seoul. Areas that are always preferred regardless of market conditions, such as school districts or areas near subway stations, showed price increases, but prices fell in areas where the supply of new housing increased."

Incheon (-0.01%→-0.03%) jeonse prices expanded their decline, and Gyeonggi (0.03%→0.02%) continued its upward trend, resulting in a 0.01% increase in the metropolitan area. The provinces (0.00%) remained flat following the previous week, while the eight provinces (0.00%→-0.01%) shifted to a decline.

Kim Hyo-seon, Senior Real Estate Specialist at NH Nonghyup Bank, analyzed, "Real estate transactions will continue to decrease until the Constitutional Court makes a clear decision on the impeachment. Rather than the actual value of real estate falling, it should be seen as a temporary halt in price increases due to the wait-and-see stance causing transactions to stop."

He added, "Even in areas like Gangnam, some scarce properties might still be traded at asking prices, but during times dominated by uncertainty, many regions will see price declines, and the scale of the declines will also increase."