"Market Takes a Breather"... Seoul Apartment Price Increase Halved [Real Estate AtoZ]

First Statistics Since the October 15 Measures: Sharp Drop in Price Growth
Seoul Still Posts High Growth Rate; All 25 Districts See Increases
Jeonse Price Growth Slightly Expands
Experts: "Entering a Period of Adjustment, Not a Price Correction"

After expanding the designation of land transaction permit zones (LTPZ, effective from the 20th) to cover all of Seoul and key areas in Gyeonggi Province, the increase in housing prices in Seoul has slowed. This is a shift from last week, when 'last-minute demand' surged ahead of the implementation of the October 15 real estate measures, which included the additional designation of LTPZs, resulting in a record-high price increase. However, since the rate of increase remains high, experts assess that the market has entered a 'breather phase' rather than signaling a reversal toward a downturn.

Weekly Apartment Price Trends Nationwide for the 4th Week of October. Korea Real Estate Board.

According to the 'Weekly Apartment Price Trends Nationwide for the 4th Week of October (as of the 27th)' released by the Korea Real Estate Board on the 30th, nationwide apartment sale prices rose by 0.07%, a smaller increase compared to last week's 0.12%. In the Seoul metropolitan area, the increase narrowed from 0.25% to 0.14%, and in Seoul itself, from 0.50% to 0.23%. In non-metropolitan regions, prices remained flat at 0.00%.

Apartment prices in Seoul rose by 0.23%. This is less than half the increase seen last week, when 'last-minute demand' ahead of the expanded LTPZ designation drove prices up by 0.50%, the highest weekly increase since statistics began in 2013.

Nevertheless, the rate of increase remains high, and the upward trend has continued for 38 consecutive weeks. All 25 districts in Seoul showed rising prices. The Korea Real Estate Board analyzed, "While prices rose mainly in some redevelopment areas, a wait-and-see attitude emerged as buyer inquiries and transactions decreased."

The 11 districts in Gangnam saw prices rise by 0.31%. In Songpa District, the increase slowed from 0.93% last week to 0.48% this week. In Gangdong District, it fell from 1.12% to 0.42%. In Yangcheon District, the rate slowed from 0.96% to 0.38%. Dongjak District also saw its increase drop from 0.79% to 0.44%.

The 14 districts in Gangbuk recorded a 0.14% increase, with 'Ma-Seong-Gwang' (Mapo, Seongdong, and Gwangjin) leading the overall upward trend. Seongdong District, which jumped 1.25% last week, recorded a 0.37% increase this week. Mapo District went from 0.92% to 0.32%, and Yongsan District from 0.63% to 0.29%.

The rate of increase in Gyeonggi Province also slowed. After rising 0.16% last week, Gyeonggi saw a 0.12% increase this week. Although the rate of increase declined in regulated areas, they still posted the highest growth rates nationwide. In Bundang District, Seongnam, which surged by 1.78% last week, prices rose by 0.82% this week, mainly in key complexes in Jeongja-dong and Seohyeon-dong. Gwacheon City saw its increase drop from 1.48% to 0.58% but remained strong. Hanam City moved from 0.63% to 0.57%.

In non-metropolitan regions, price trends were mixed. Gwangju ended a 75-week decline by stabilizing at zero this week after a -0.01% drop last week. In contrast, Daegu fell by 0.04% this week, marking its 100th consecutive week of decline. Housing prices in Daejeon, Jeju, and Jeonnam also continued to fall.

Anxiety in the rental market has grown further. Nationwide weekly jeonse prices rose by 0.07% (compared to 0.06% the previous week), and in Seoul, the increase was 0.14%, up from 0.13% last week. The Seoul metropolitan area also saw the rate of increase expand from 0.09% to 0.10%. In Seoul, Songpa District (0.33%) and Gangdong District (0.33%) saw increases centered on major complexes in Jamsil and Dunchon. Yangcheon District (0.21%), Yongsan District (0.19%), and Seocho District (0.16%) followed. In Gyeonggi Province, Hanam City (0.40%), Sujeong District in Seongnam (0.34%), and Yeongtong District in Suwon (0.33%) posted high rates of increase.

Experts diagnose that the market has entered a 'period of adjustment,' characterized by reduced transactions rather than falling prices. Park Wongap, Chief Real Estate Expert at KB Kookmin Bank, said, "It appears to be a 'plateau phenomenon,' where prices pause at a certain level after a sharp rise. The market's resilience has strengthened due to concerns about supply shortages and abundant liquidity." He added, "A period of adjustment with fewer transactions, rather than a price decline, is likely to occur and could last at least three months, possibly until the first quarter of next year."

Ham Youngjin, Head of the Real Estate Research Lab at Woori Bank, said, "It will take time to reach the price stability the government expects. With jeonse prices also rising, a decline in sale prices will be limited, and considering the winter off-season and the Lunar New Year holiday, the lull in transactions could continue for three to six months."