Gangnam apartment transaction price surpasses 1 billion … 250,000 households in total rent and monthly rent are locked

Samseong-dong, Gangnam-gu, Seoul, a land transaction permission zone. After the contract, you can only buy an apartment for the purpose of living in. At the beginning of this year, 145m2 for I-Park was sold for 5 billion won. From July 2017 to August of last year, the price, which remained similarly around 4 billion won, exceeded the end of last year and rose by 1 billion won for a new five months.
From the beginning of the new year, house prices are unpretentious. According to the Korea Real Estate Agency, the rate of increase in apartment prices in Seoul last week was 0.7%, up to the level just before the high-intensity measures that the government poured out three times in June and August last year. For two weeks into the New Year, apartment prices have risen by 0.52% nationwide and 0.13% in Seoul. The rate of increase for two weeks at the beginning of the year is the highest in the country since 2011 and Seoul since 2018.

Housing market regulation has lost its strength. This year, the sale price of one out of 10 apartments sold in Seoul exceeded 1.5 billion won. It is the same as before the 12/16 measures in 2019 (10%) when the government banned mortgage loans for over 1.5 billion won. Last December, the volume of apartment sales in Seoul increased to the previous year.

Thanks to the heat at the beginning of the year, the outlook for this year is also on the strong side. This is because the factors that raised the house price last year will continue to work this year. There are overflowing liquidity, ultra-low interest rates, lock-in for sale, ‘spirituality’ (to buy a house by raising money in all manners as if attracting the soul), and the jeonse crisis.

Among them, the jeonse crisis, which will become more severe this year, is emerging as the biggest variable. In fact, the rate of increase in apartment rental prices (0.51% nationwide, 0.26% in Seoul for two weeks) from the beginning of the year has been higher than the sale price.

The shortage of chartered sales is expected to worsen this year. The maturity of 1.95 million cases of jeon and monthly rent contracts concluded in 2019 (based on reporting on the confirmed date) will return this year. Most of them are expected to want the right to apply for a contract renewal, which only requires a 5% increase in rent, so there are not many products to come out of existing private houses. The contract renewal rate was 70.3% as of November last year since the enforcement of the right to apply for contract renewal at the end of July last year. It increased by 13.1 percentage points from before the enforcement of the renewal claim (57.2%). 250,000 households are locked out of the market due to the effect of the right to apply for contract renewal.

There will be fewer new houses this year. According to the Ministry of Land, Infrastructure and Transport, the planned number of residents nationwide this year is 424,000, 52,000 less than last year. In Seoul, the number of households decreased by 12,000 to 68,000 this year.

In both existing and newly built houses, the number of rented houses decreased, and the number of rented houses decreased sharply. According to the real estate site known, the average number of apartment rentals in Seoul in January this year was 18,000, down more than 60% from last January (50,000).

Kim Deok-rye, head of the Housing Industry Research Institute’s Housing Policy Research Department, said, “The government is putting a drive on housing supply, but it will be difficult to resolve the supply-demand mismatch this year in the short term.”

The jeonse crisis stimulates the trading market as part of the demand for cheonsei converts to trading. According to the government, the proportion of homeless people among buyers in Seoul in the fourth quarter of last year (October-December) was about 10 percentage points higher than in the second quarter (51.6%) and the third quarter (52.8%). He bought a house without looking for a private house.

Professor Kwon Dae-jung of Myongji University analyzed that “the number of homeowners is shrinking due to the strengthening of the tenure tax, and real demand is leading the house price, such as the homeless and the one-homed who wants to change homes.”

However, the variable that will hold back the rise in house prices is also expected to stand out from this year. Interest rates may rise as the novel coronavirus infection (Corona 19) situation stabilizes. It’s a direct hit on’Young Chill’. The current interest rate is so low that even a slight increase in the interest rate makes the loan interest burden much larger.

In the meantime, the price of the house has risen so much that it is difficult to withstand it except for the ultra-low interest rate, and the purchasing power is running out. According to Kookmin Bank, median housing prices in Seoul as of September last year were 15.6 times that of median income. It is the highest ever since the 2008 survey. In September 2017, three years ago, it was 11.4 times.

There are also concerns about the’can cheonsei’, which has risen to the point where it is difficult to get back the soaring household debt and deposits. This phenomenon appears when the house price is weak.

Multi-homed people still prefer holdings or donations over selling, but if the tax tax is realized this year, they can tilt to sell. Last year’s surge in high-priced housing prices, the actualization of publicly available prices, and an increase in the tax rate are expected to lead to a surge in taxation this year.

In the past, when the sale price and the jeonse price jumped together, it was the top of the housing market, and a bear market soon appeared. According to Kookmin Bank, last year’s apartment sales and rental prices in Seoul rose 13.06% and 12.25%, respectively. Both of them rose more than 10% in around 1990 after the Olympics, around 2000 after the financial crisis, and in 2006, when the Roh Moo-hyun administration reached its peak. Then, in the mid-1990s, due to the large-scale occupancy of the first new city in the Seoul metropolitan area, the post-effects of the 2008 financial crisis resulted in lower housing prices in Seoul for 3-4 years. The apartment price in Seoul has never risen more than 10% even after six years in a row like last year.

Park Won-gap, senior real estate expert at Kookmin Bank, emphasized, “Like the corona last year, unexpected variables this year can lead the market in an unexpected direction.” Reporter Ahn Jang-won [email protected]