91,000 housing transactions in January… 35% decline in transfer rate
“Continue the pipe tax”… Deal cliff → house price decline’Well’
Reporter Park Seong-hwan = “It’s a situation where both sellers and buyers notice.”
On the 26th, a representative of an authorized brokerage office in Heukseok-dong, Dongjak-gu, Seoul, told Newsis reporters, “There was no transaction this month except for the extension of the jeonse and monthly rent contracts.”
Representative Lee said, “The landlords do not lower their quotes, and those who are waiting for the purchases do not close the deal well while waiting for the house price to drop.”
The situation is intensifying as the’transaction cliff’ in the real estate market. After the government announced its 2·4 supply plan to supply 830,000 households nationwide, including 320,000 households in Seoul, the battle between sellers and buyers continues. In particular, last month, housing transactions across the country decreased by 35% compared to the previous month, and the transaction cliff phenomenon is becoming more pronounced as you go to the provinces. Analysts say that both sellers and buyers have turned to the wait-and-see trend and have crossed the trading cliff and entered the’cooler period’.
Last month, the volume of home sales fell below 100,000. This is the first time since October last year that the transaction volume has fallen below 100,000.
According to the national housing transaction volume for January released by the Ministry of Land, Infrastructure and Transport, the number of housing transactions last month was 9,679 cases, down 35.4% from the previous month (140,281 cases). This is a 10.5% decrease from the same month last year (10,1334 cases). The local transaction volume also decreased by 43.5% to 43,547.
The volume of transactions in Seoul was 12,275, a 24.2% decrease from the previous year. The decline in the Gangnam area, where expensive houses were concentrated, was remarkable. The volume of transactions in the Gangnam area was 5904, down 28.3% from the previous year and 19.9% in Gangbuk (6371). By housing type, the number of apartments was 64,371, a 39.3% decrease from the previous year, and the number of non-apartment houses (26,380) decreased 23.2%.
The volume of transactions in the metropolitan area was 42,7132, 25.4% from the previous year, and the volume of local transactions decreased by 43.5% to 43,547.
The cheonsei transaction volume, aggregated based on last month’s confirmation date, was 17,537, down 2% from the previous month. This is a 3.4% increase from the same month last year. The number of cases in the metropolitan area was 11,6684, a decrease of 3.8% from the previous year, while the number of local areas increased by 1.4% to 6,2853 cases. The share of monthly rent in the monthly rent transaction volume was 41%, an increase of 2.7%p from the same period last year.
The rise in apartment prices in Seoul has slowed slightly since the government announced the 2·4 supply plan, but it is still rising. The prices of apartments in the metropolitan area increased again.
According to the weekly apartment price trend announced by the Korea Real Estate Agency, apartment sales prices across the country rose 0.25% in the fourth week of this month (as of the 22nd). If the metropolitan area rose to 0.31%, the increase was wider compared to the previous week (0.30%). Apartment prices in the metropolitan area rose 0.33% for 3 consecutive weeks from the 4th week of last month to the 2nd week of this month, recording the highest increase rate since related statistics were prepared.
Incheon increased its increase from 0.34% last week to 0.39% this week, and Gyeonggi recorded 0.42% the same as last week. Incheon is mainly constructed in Cheonghak, Yeonsu, and Dongchun-dong, which are relatively low in price in Yeonsu-gu (0.55%), and in Gyeonggi-do, Uiwang-si (0.92%), Ansan-si (0.80%), and Namyangju-si ( 0.71%) and Uijeongbu City (0.70%) rose.
Apartment prices in Seoul rose by 0.08%, recording the same rate as last week. In the Gangnam area, Seocho-gu (0.11%) focused on reconstruction and new construction in Banpo and Jamwon-dong, Gangnam-gu (0.10%) focused on Apgujeong-dong reconstruction, and Songpa-gu (0.10%) focused on Sincheon and Jamsil-dong. Yangcheon-gu (0.11%) focused on the reconstruction of Mok-dong and Sinjeong-dong, while Mapo-gu (0.11%) focused on the Sangam-dong station area and reconstruction.
Some have been interpreted as a sign of a decline in house prices as a transaction cliff phenomenon following the government’s second and fourth measures. It is interpreted that the massive supply measures of 850,000 units have partially calmed the psychology of housing insecurity.
However, it is pointed out that it is not enough to judge the overall flow of the real estate market only by the transaction cliff. The real estate market’s main opinion is that it is still too early to determine whether the house price will decline in the future. This is because the government has put forward a public-led development method, but it is still unclear whether private reconstruction and redevelopment associations will actually participate in public-led maintenance projects, and whether the planned quantities will actually be supplied within five years targeted by the government.
In addition, buying sentiment has not been dampened in the’seller (supplier) dominant market’ where the landlord takes the lead in the market. It is not unrelated to this that the sentiment for purchasing apartments in the metropolitan area is soaring. As of the 8th, the index for the purchase and demand of apartments in the metropolitan area was 118.8. This is a 0.6p increase from the previous week (118.2), and is the highest since July 2012, when the related research began.
If the index is 100, which is the reference value, supply and demand are at the same level, and if it is close to 200, it means that there is more demand than supply.
In the metropolitan area, Gyeonggi (124.9) reached an all-time high. Gyeonggi Province surpassed 100 in December 2019 as the government tightened the regulations on loans for high-priced apartments as a countermeasure on December 16, 2019, as the demand for trading passed from Seoul to Gyeonggi. From the first week of October last year (107.4) to last week, the upward trend has continued.
The index of supply and demand for apartment sales in Seoul was 111.9. It is the highest in 7 months since July 13 (113.1), just before the announcement of the August 4 supply measures last year. Since the buying sentiment is so strong, we cannot rule out the possibility that the rent and the house price will fluctuate again ahead of the spring season.
Experts explained that it is necessary to observe the movement of the real estate market more in order to confirm the effectiveness of the 2·4 countermeasures.
Dae-Jung Kwon, a professor at the Department of Real Estate at Myongji University, said, “The government’s second and fourth measures are positively evaluated in terms of supply expansion, but market uncertainty has increased as specific details such as region and timing have been omitted. He said, “Because it will be difficult for the time being, except for the sale of multi-homed units that must be sold before and during the transfer tax in June, the house price will remain strong.”
Prof. Kwon said, “The government sent a supply signal, but the government’s second and fourth measures resulted in a decrease in transactions as a result of a complex effect of a wait-and-see tax due to uncertainties such as cash liquidation, and fatigue due to a short-term surge in house prices.” He added, “You have to watch the changes a little more before making a judgment.”
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