Record Low Number of New Real Estate Agencies in January Amid 'Transaction Cliff'
Rapid Growth of Direct Transactions... Shrinking Brokerage Market
Concerns Over Rise in Unregistered and Illegal Brokers... Push for System Reform
The number of newly opened certified real estate agents in January hit an all-time low. For the first time ever, it dropped below 1,000. Traditionally, January is the most active month for new openings, centered around those who passed the previous year's exam, but the number of newly opened agencies sharply declined regardless of whether in Seoul or other regions. This is analyzed as a result of the real estate market downturn deeply penetrating the market.
In January 2018, when the real estate market was booming, the number of newly licensed real estate agents reached as high as 2,550. However, since falling below the 2,000 mark in 2021, the number has steadily declined, eventually dropping below 1,000 in January of this year. Getty Images
According to the Korea Association of Certified Real Estate Agents on the 11th, the number of certified real estate agents who opened in January was counted at 870. This is the lowest number of openings in January since related statistics began in 2015. Compared to 1,118 in January of the previous year, it decreased by 22.1%. During the same period, the total number of agents who chose to close (852) or temporarily suspend operations (118) was 970, exceeding the number of newly opened agencies.
Simultaneous Nationwide Decline Regardless of Region... Direct Hit from the 'Transaction Cliff'
In January 2018, when the real estate market was booming, the number of newly opened certified real estate agents reached 2,550. However, after falling below the 2,000 mark in 2021, the number steadily declined, eventually dropping below 1,000 this January. The decrease in agents was not limited to any region. Among the 19 branches under the Certified Real Estate Agents Association, all except Jeonnam and Jeju saw a decrease in openings compared to the same period last year. Some places saw the number halved compared to January 2024, such as Daegu (59→24) and Daejeon (34→16).
The biggest reason for the decline in popularity is the decrease in real estate transactions. The number of housing transactions, which exceeded 1 million during the real estate boom in 2020 and 2021, plummeted to around 500,000 in 2022. Although there has been a slight recovery over the past two years, last year’s 642,576 transactions remain low compared to the peak. The popularity of the certified real estate agent exam, once called the ‘national qualification,’ is also declining. The number of applicants dropped from 399,975 in 2021 to 215,081 last year, roughly halving.
Amid domestic and international adverse factors such as economic recession and sluggish domestic demand, the number of small business closures is rapidly increasing, leaving many vacant stores lined up in a commercial area densely packed with shops in Sinchon, Seoul.
Surge in Direct Transactions... "Many Unregistered and Illegal Brokers"
The increase in direct transactions has also had an impact. According to data received by Rep. Bok Ki-wang’s office of the National Assembly Land, Infrastructure and Transport Committee from the Ministry of Land, Infrastructure and Transport, among 3,186,963 real estate transactions completed from November 2021 to August last year, 54.2% (1,728,659) were brokered transactions, and 45.8% (1,458,304) were direct transactions. Brokered and direct transactions are almost evenly split. For example, the popular secondhand trading platform ‘Danggeun Market’ saw real estate transactions increase from just 268 in 2021 to 34,482 last year, a more than 100-fold increase in three years.
A representative from the Korea Association of Certified Real Estate Agents analyzed, "The ‘transaction cliff’ and the increase in direct transactions have relatively shrunk the broker market." However, they explained, "Many direct transactions are conducted through unregistered or illegal brokers, so we are preparing related countermeasures." Under current laws and precedents, unregistered brokerage is not punished if it is a one-time transaction. The association plans to push legislation that prohibits brokerage activities by anyone other than licensed certified real estate agents, even if it is a one-time transaction."
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