Apartments are being sold at a price lower than the previous high one after another. ‘Acro River Park’ in Banpo-dong, Seocho-gu, Seoul, where the price of 84 square meters for exclusive use was sold 520 million won lower than the highest price. / Reporter Kim Beom-jun
Eight out of 10 apartments sold across the country last month have seen their prices drop from their previous highs. The downward stabilization of house prices is becoming evident, with the number of complexes falling by hundreds of millions of won. According to the ‘December 2021 National Apartment Transaction Status Analysis’ data received from the Korea Real Estate Agency by Rep. Kim Hoe-jae of the Democratic Party of Korea on the 24th, among the 22,729 apartments sold nationwide last month, the number of transactions that fell from the highest price was 18,068, or 79.5%. reached
In the metropolitan area, 3,747 (67.6%) of 5541 cases were counted as down-trading transactions. In Seoul, 54.3% of all transactions were lower than the previous reported price. The share of falling transactions in Seoul rose from 35.1% in September last year to 40.4% in October and 45.9% in November, increasing for three consecutive months until last month. Last month, the downtrend in Gyeonggi and metropolitan areas was 72.0% and 62.8%, respectively. In the provinces, 14,321 of the 17,188 transactions were down, accounting for 83.3% of the total.
Acro River Park in Banpo-dong, Seocho-gu, Seoul, which is considered to be the most expensive apartment on the Han River, has an exclusive area of 84 square meters (8th floor), which was changed to 3.98 billion won last month. Compared to last November, when the same housing type recorded a new price of 4.5 billion won (11th floor), it fell 520 million won in just one month. The 84 m² dedicated to Uiwang Naeson e-Pyunhansesang in Uiwang-si, Gyeonggi-do was recorded at 1.12 billion won (17th floor) in July last year, but it was sold for 910 million won (9th floor) last month, dropping more than 200 million won.
Since last month, the stabilization of house prices has been spreading. According to the weekly apartment price trend of the Real Estate Agency, the rate of increase in apartment prices in Seoul last week was 0.01% compared to the previous week, the 6th consecutive week of increase since the first week of last month (0.10%). Apartments nationwide also rose only 0.02% last week, recording the lowest rate of increase in about two years and three months since the second week of October 2019.
House price decline spreads to Gangnam
Hundreds of millions of dollars away from the trading cliff
The fact that 8 out of 10 apartment transactions nationwide last month were lower than the previous high shows that the rise in house prices has definitely stopped. In Seoul, although the width of Gangnam and other areas has decreased, there are many places that are maintaining an upward trend. However, there are many predictions that it will turn downward soon. However, some analysts say it is too early to predict the mid- to long-term direction as there are many variables such as the presidential election and interest rate hikes.
○ “Price bubble burst due to interest rate hike”
According to the real transaction price disclosure system of the Ministry of Land, Infrastructure and Transport on the 24th, there are several transactions in the Gangnam area of Seoul where high-priced apartments are clustered, hundreds of millions of won lower than the previous reported price.
The 128 m² dedicated to ‘Mido’ in Daechi-dong, Gangnam-gu, was changed to 3.82 billion won (12th floor) on the 13th of last month. Compared to the same housing type sold for 4.14 billion won (10th floor) in November last year, it fell by more than 300 million won in just one month. This complex is one of ‘Woo Seonmi (Woosung, Seonkyung, Mido)’, a signboard reconstruction in Daechi-dong. The 84 m² dedicated to ‘Helio City’ in Garak-dong, Songpa-gu fell by more than 200 million won from 2.45 billion won (17th floor) last November to 2.225 billion won (29th floor) last month.
In the Gangnam area, since the ‘December 16 Measure’ in 2019, there were many apartments exceeding 1.5 billion won, which did not receive any loans at all, so they were less affected by the tightening of loan regulations. However, as the perception of high house prices spread throughout the market and interest rates rise, stocks and cryptocurrencies are being affected significantly.
It is analyzed that urgent sales are coming out mainly for homeowners who are in urgent need of funds. This is the reason why there are many downtrends in the suburbs of Seoul or the metropolitan area, where a lot of ‘Youngkljok’ with a high proportion of loans, such as newlyweds and young people, bought them. The 59m2 dedicated to ‘Changdong Jugong 1 Complex’ in Dobong-gu recorded a new price of 770 million won (5th floor) in July last year. After that, the transaction was cut off, but last month it fell to 675 million won (13th floor), nearly 100 million won at a time. The 99 m² dedicated to the ‘Misa River Lawyer Summit’ in Hanam, Gyeonggi Province, was traded at 1.57 billion won (9th floor) in May last year and crossed the loan ban line (1.5 billion won), but fell by 370 million won to 1.2 billion won (3rd floor) last month. lost. The 84 m² dedicated to ‘Cheongna Jeil Punggyeongchae 2nd Edu&Park’ in Seo-gu, Incheon fell by nearly 200 million won from 900 million won (17th floor) last October to 718 million won (19th floor) last month.
○“The new government’s real estate policy is a variable”
In a situation where lending regulations have been greatly strengthened, if the base rate hike continues, it is predicted that the contraction in purchasing power will continue for a considerable period of time. From this month, the total debt-to-income ratio (DSR) of 40% began to be applied. The Bank of Korea also raised the base interest rate to 1.25% on the 14th. Ham Young-jin, head of the Big Data Lab, said, “Only real estate cannot be free from global austerity.
The ‘trade cliff’ continues in Seoul. According to the Seoul Real Estate Information Plaza, the transaction volume of apartment sales in Seoul last month stood at 1,053 as of the same day, lower than in November 2008 (1163), which was the lowest level due to the global financial crisis. Since apartment transactions can be reported within 30 days, the deadline is left until the end of this month, but no major changes are expected.
However, it is unclear how long this adjustment will last. Most research institutes, such as the Housing Industry Research Institute and the Korea Construction Policy Research Institute, predict that house prices will rise throughout this year. It is speculated that if regulations are eased after the presidential and local elections in March, the buying trend may resume. In Gangnam major reconstruction complexes or super-high-priced apartments, where real demand is strong, there are occasional reports of transactions. Seo Jin-hyeong, president of the Korean Real Estate Association (professor at Kyungin Women’s University), said, “The fact that the supply shortage in Seoul cannot be resolved in a short period of time has not changed.
Reporter Yeonsu Shin sys@hankyung.com
