Seoul’s apartment market is showing signs of weakening, with prices in the affluent Gangnam district falling for the second consecutive week, according to data released by the real estate industry and the Korea Real Estate Board. The shift comes ahead of a key policy decision by the Bank of Korea (BOK) and as the outcome of new housing subscription offerings in the greater Seoul area loom large.
The BOK’s Financial Stability Board meeting, scheduled for March 12, is expected to focus less on adjusting interest rates and more on assessing the quality of household debt and potential risks associated with real estate project financing (PF), according to industry analysts. Recent measures to curb household debt, such as the expanded application of the Debt Service Ratio (DSR), are taking hold, and the BOK’s assessment will likely influence further adjustments to lending practices by financial institutions. Experts predict a hawkish tone from the BOK, emphasizing financial system stability, suggesting borrowers should adopt a conservative approach to new loans.
The cooling trend in Gangnam, traditionally a bellwether for the Seoul property market, is reflected in a decline in the supply-demand index to 99.6, falling below the benchmark of 100 for the first time in a year. This indicates that the number of potential sellers now exceeds buyers in the area. The price decline in Gangnam (-0.07%) and Songpa (-0.09%) districts is attributed to homeowners lowering asking prices ahead of the May 9 expiration of a tax exemption on multiple home ownership, as well as growing concerns about a potential delay in interest rate cuts.
The performance of new housing subscription offerings in the greater Seoul area will also be closely watched. The ‘Suwon Dosan Weive The Central’ (approximately 2,000 units) and ‘Guri Station Hainiti River Park’ projects, both offering convenient access to Seoul, are seen as key indicators of market sentiment for the first half of the year. Despite concerns about high construction costs, demand for branded, large-scale developments remains a critical factor.
Meanwhile, the Seoul Metropolitan Government’s policy to expedite approximately 85,000 housing projects is gaining momentum, with increasing applications for relocation loans. Recent changes to regulations, particularly stricter requirements for verifying residency for overseas residents and foreigners, are also impacting the market, potentially reducing investment-driven transactions from outside the country.
Earlier this year, Bank of Korea Governor Lee Chang-yong spoke at the Global Macro Conference, addressing policy decisions in a period of global fragmentation, according to the BOK’s official website. Recent personnel changes within the Bank of Korea, including promotions announced in January, may also influence policy direction, with new leadership appointed to key positions such as the Ethics Management Office and the Sustainable Growth Office (as reported by Yonhap News Agency).
