Although the recent decline in real estate prices
It is difficult to feel the price drop in the field
The trade itself is frozen.
Some examples are representative of the overall overcapacity of the market
“I heard that house prices fell on the news and I was treated like a stranger.”
Park, 43, is looking for an opportunity to buy a house after hearing the news that house prices have been declining recently. But over the weekend, she came to realize that the time was not yet for her as she toured the real estate agencies in Junggye-dong, Nowon-gu, Seoul. When looking for a property in the low 800 million won range on an exclusive area of 84 square meters, a real estate agent told him, “There is no property to show when you come to think of that price now.” Park said, “If you look at the news every day, doesn’t it come out that an apartment has fallen by several hundred million won? In Nowon-gu, house prices have dropped a lot, but if you actually go there, you don’t know where it fell,” he said.
Although various real estate price indicators have shown a clear decline recently, voices from the field are continuing that it is difficult to feel the decline in house prices. In other words, when you try to buy a real house, the house you want to buy doesn’t fall at all. Experts have diagnosed that some cases are overrepresenting the market as a whole due to the lack of trading volume.
According to the Korea Real Estate Agency’s weekly apartment trend in the second week of September (as of the 12th) on the 18th, the nationwide sale price fell 0.16% from the previous week. Apartment prices in Seoul also fell 0.16 percent, the biggest drop in nine years and nine months. Dobong-gu (-0.31%) and Nowon-gu (0.29%) had the largest drop.
However, looking at the actual transactions, it is difficult to conclude that the trend is still in decline. Experts pointed out that “the overrepresentation of specific cases has only created the illusion that house prices have fallen as a whole.”
On the 31st of last month, an exclusive area of 84 square meters for Jamsil Els in Songpa-gu, Seoul was traded for 2.05 billion won (4th floor). This is a drop of 650 million won from the previous high of 2.7 billion won (14th floor) traded in October 2021. Even considering the premium according to the number of floors, it has fallen sharply. At the beginning of this year, the average transaction of 84 square meters fell by more than 200 million won from 2.2 billion to 2.3 billion won.
On the other hand, the exclusive area of Helio City in Songpa-gu of 84㎡ was traded for 2.09 billion won (10th floor) on the 6th of last month, but the 23rd floor was traded for 2.2 billion won after 20 days. Heliocity is the largest complex in Korea with a total of 84 buildings and 9510 households. There were only 32 transactions between January and August this year, when the Ministry of Land, Infrastructure and Transport registered real transactions in the open system. Even taking into account the low summer season, there were only 1 case in June and 5 cases in July. A real estate agent near Helio City said, “If it is this big, at least 40 to 50 trades should be made a month, but now the trade itself has stopped.”
Even in terms of the total transaction volume in Seoul, the total number of transactions as of July was 643, which is one-seventh of July last year (4673). Although the reporting period is not over yet, the number of transactions in August fell further to 540. A real estate agent in Seongbuk-gu, Seoul said, “Things that are being sold in a hurry should be viewed as 100% historical items.”
Lee Eun-hyeong, a research fellow at the Korea Construction Policy Research Institute, said, “Although there are claims that the real estate market has plunged or entered a stabilization phase, demand suppression policies such as loan regulation are suppressing transactions, and the number of transactions is too small to understand the overall market.” Considering that some reports are still being traded, even in places that are considered to be high, it is not in a normal downtrend at the moment.”
There are some downtrends, but the fact that there are no indicators that can be seen as “falling as much as it went up” is another reason why it is difficult to see it as a “trend downtrend.” According to the Korea Real Estate Agency, the cumulative change in apartment sales prices nationwide from January to August 2022 was -0.86%. On the other hand, the cumulative change in apartment sales prices across the country last year was 10.19%. Although it is said that house prices have entered a downward trend this year, it is only one-eleventh the level of house prices that rose last year.
Park Won-gap, senior expert in KB Real Estate, said, “The unusual case is being accepted by the inmates as if it is an overall trend, creating the illusion that house prices have entered a full-fledged decline.”