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New apartment prices are falling… Enduring the old complex

picture explanationA view of the apartment complexes in Mok-dong, Seoul, where the expectations for reconstruction are rising due to the concentration of old complexes that are more than 20 years old. [매경DB]

While the rise in apartment prices across the country has stopped, new apartments under five years of age, which have driven the rise, are the first to fall. Analysts say that it has been hit by tightening loan regulations, and the accumulated fatigue from rising demand is having an impact. On the other hand, apartments that have been built for more than 20 years have shown a relatively good price defense compared to new apartments, although the rise has slowed. It is interpreted that expectations that reconstruction regulations will be eased are reflected.

According to the Korea Real Estate Agency on the 31st, in the fourth week of December 2021 (as of the 27th), the price of new apartments of 5 years or less nationwide fell by 0.04%. The rate of increase in apartment prices for less than five years, which has risen non-stop since August 2019, turned down to 0.01% in the third week of December 2021, and then the rate of decline increased further. By region, new apartments in Gyeonggi-do fell by 0.05%, leading the price decline. Gyeongbu 1 (Gwacheon, Anyang, Seongnam, etc.), Gyeongbu 2 (Yongin, Suwon, etc.), West Coast (Bucheon, Ansan, Gwangmyeong, etc.), Gyeongui (Gimpo, Goyang, etc.), Gyeongwon (Dongducheon, Uijeongbu, etc.), etc. In most regions, the price of new construction under five years has fallen.

The atmosphere in Seoul is similar. The price drop in the northeast region including Seongdong-gu, Gwangjin-gu, and Nowon-gu was remarkable. In this area, all constructions in less than 5 years (-0.01%) and semi-builds over 5 years to less than 10 years (-0.03%) fell. In the northwest area (Eunpyeong-gu, Seodaemun-gu, Mapo-gu, etc.) and the southwest area (Dakdong-gu, Yangcheon-gu, Gangseo-gu, etc.), the price of new apartments built less than 5 years ago fell. On the other hand, the number of apartments built more than 20 years ago nationwide rose by 0.07%, continuing the upward trend. Although the upward trend, which was over 0.1%, is on the decline, it is defending the price. In Gyeonggi-do and Seoul, the number of apartments over 20 years old rose by 0.07% and 0.03%, respectively.

Even in rural areas, the price trends of new and old apartments are moving in the opposite direction. Apartments under 5 years old in Busan fell 0.05%, while apartments over 20 years old rose 0.01%, although the rate of increase was reduced. Ulsan also fell 0.11% for those with 5 years or less, but rose 0.1% for those over 20 years.

It is analyzed that this phenomenon is due to fatigue from the surge in new apartment prices in the past five years or less, while expectations remain that the government and Seoul Metropolitan Government will loosen regulations on reconstruction and redevelopment and the project can be carried out. A prolonged supply shortage across the country has led to a sharp shift in demand for new apartments in recent years. From 2020 to December 2021, the number of new constructions under five years in the metropolitan area rose by 28%, the largest increase among all universities. During this period, apartments for more than 10 years and less than 15 years and more than 15 years to less than 20 years rose by 24%.

In fact, some apartment complexes in Gyeonggi-do, where sales prices have skyrocketed recently, are being traded at lower prices. ‘Pyeongchon The Sharp Central City’ (completed in 2016) in Anyang, Gyeonggi-do, where there was an issue at Indeokwon Station on the GTX-C line, was sold for 1.38 billion won in October 2021. It fell 10.8% from the highest price (1.54 billion won) in August of the same year. On the other hand, the asking prices of apartments over 20 years in Gangnam and Bundang, Seoul, have not come down.

Shim Gyo-eon, a professor of real estate at Konkuk University, said, “The supply of new apartments is not very good, so demand has driven the price increase.” “They seem to be holding on because of expectations of deregulation,” he said.

[손동우 부동산전문기자]
[ⓒ 매일경제 & mk.co.kr, 무단전재 및 재배포 금지]

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