A view of an apartment building in Gangnam, Seoul. Photo/Reporter Kim Hyun-jin
[뉴스토마토 김현진 기자] As the Bank of Korea raised the base rate, the era of ‘zero interest rates’, which began in March last year, came to an end. It is pointed out that the interest rate hike itself will put a burden on the real estate market, making it difficult for consumers to enter the market.
According to industry sources on the 29th, the Bank of Korea held a Monetary Policy Committee meeting on the 25th and raised the base interest rate from 0.75% a year to 1.00% by 0.25 percentage points. The benchmark interest rate, which fell to the 0% level in the aftermath of last year’s Corona 19, came to an end after a year and eight months.
In the recent real estate market, it seems that the increase in house prices is slowing down due to the combination of loan regulations and interest rate hikes.
According to Real Estate R114, the sale prices of apartments in 18 Seoul and 22 Gyeonggi apartments showed a flat or declining trend this week. In fact, the rate of increase in apartment prices in Seoul decreased slightly from 0.09% to 0.08%, and from 0.05% to 0.04% in Gyeonggi and Incheon.
Amid the slowdown in house price growth, the number of people who want to sell apartments in Seoul continues to increase.
According to the Korea Real Estate Agency, the supply and demand index for apartment sales in Seoul this week was 98.6, falling below the baseline of 100 for the second week in a row following 99.6 last week. Based on the baseline of 100, the closer to 0, the greater the supply than the demand, and the closer to 200, the greater the demand than the supply.
It is pointed out that as the base rate rises, it may become difficult for consumers to enter the market. As the base interest rate rises, the related loan interest rate also rises, which increases the financial burden.
Ham Young-jin, head of Big Data Lab, said, “The mortgage interest rate, which is affected by the base rate, exceeded 3% in September. The burden will increase by about 500,000 won from 6 million won to 6.5 million won.”
He predicted, “The increase in the base rate will be in line with the October household loan regulations aimed at controlling the rate of increase in household debt and the financial sector’s move to reduce the loan limit, limiting real estate purchase sentiment and reducing housing transaction volume.”
Kim In-man, director of the Real Estate Economic Research Institute, said, “In general, real estate is inversely proportional to interest rates. It is difficult to get a loan, but as interest rates have risen, the desire to purchase will also decrease.”
In particular, as the base rate is expected to rise further, the impact on the real estate market is expected to increase in the future.
Song Seung-hyeon, CEO of Urban and Economic Cooperation, said, “The interest rate acts as a downward pressure on housing prices.” “Even if the base rate is 1%, it can still be judged that the interest rate is low. However, if interest rates are further raised next year, the downward pressure will increase.”
Reporter Hyunjin Kim email@example.com
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