House prices in a labyrinth… “Further rise in Seoul” vs. “Deadcat bounce”

With the Seoul apartment market turning upward last May and local apartment prices turning upward last month, the market’s interest in the future direction of housing prices is growing. Although the actual sales price index, housing purchasing power, and housing price outlook have improved, the possibility of an interest rate hike cannot be ruled out in the future, and there is considerable downward pressure on housing prices due to the overflow of unsold units and the unfavorable domestic economy.

Experts say that although house prices have entered a recovery trend since the end of last year as the government began to relax real estate regulations on a large scale, the possibility of a sharp rise in house prices in the future is limited, and they believe that the polarized market will deepen. However, there are conflicting predictions that house prices will continue to rise, even if moderately, especially in some regions such as Seoul, and that house prices will have a ‘dead cat bounce’ (fall after a brief rise) due to various unfavorable factors such as the macroeconomy.

Actual transaction price and asking price rise… Housing purchasing power has improved… Market housing price outlook also rises

According to the Korea Real Estate Agency on the 6th, in the last week of August (as of the 28th), apartment sales prices nationwide rose 0.06% from the previous week, rising for 7 consecutive weeks. Apartment prices in Seoul have continued to rise for 17 consecutive weeks since the fourth week of May (as of the 22nd), and in other provinces, the price has continued to rise for two consecutive weeks. National apartment rental prices also increased by 0.07% for 6 consecutive weeks, and Seoul apartment rental prices also rose for 17 consecutive weeks.  

Purchasing power also improved. According to KB Real Estate, the KB apartment mortgage loan PIR in Seoul was 12.7 as of the second quarter of this year, lower than the previous quarter (14.5). This is the lowest level since the first quarter of 2021 (12.7). PIR ( Price to Income Ratio ) is the housing price divided by household income. KB Apartment Mortgage Loan PIR represents the burden when a person with a middle income who received a KB Kookmin Bank real estate mortgage loan (apartment) loan purchases a middle-priced apartment in Seoul . KB Apartment Mortgage Loan PIRThis figure of 12.7 means that you need to save up your annual salary for 12.7 years to buy a house, and the lowering of this number is interpreted as an improvement in purchasing power compared to the past.

The housing price outlook in the market has also improved. According to the August consumer trend survey released by the Bank of Korea, the housing price forecast CSI was 107, up from 102 the previous month. The housing price outlook CSI is a psychological indicator, and when it exceeds the standard value of 100, it means that market sentiment regarding the housing market is optimistic. The increase in this index by 100 is interpreted as market expectations for the housing market becoming stronger.

As major indicators related to the real estate market have improved, many analysts say that the market, which had been stagnant starting this year, has entered a recovery phase. Some in the market are even talking about the ‘bottoming house price’ theory.

Trading volume growth has slowed and the proportion of rising transactions among total transactions has also decreased.

However, a slightly different atmosphere has recently been detected in metropolitan areas such as Seoul, which led the national real estate market recovery.

According to the Seoul Real Estate Information Plaza, the number of apartment sales transactions in Seoul (based on contract date) in August was 2,449, down from the previous month (3,591). The number of apartment transactions in Seoul has steadily increased since hitting a low in October last year (559), and after exceeding 3,000 in April of this year, expectations for the normalization of apartments in Seoul have increased, but has decreased for two consecutive months since June (3,849). According to the Ministry of Land, Infrastructure and Transport, the number of apartment transactions nationwide has continued to decline since reaching 40,746 in May. As trading slows, listings are piling up. According to real estate big data company Asil (actual apartment transaction prices), as of today, the number of apartments for sale in Seoul was 73,543, up 13.8% from June 1 (64,571).

The proportion of upward transactions in the metropolitan area apartment sales market is also decreasing. As a result of analyzing real estate R114 apartment transaction prices in the metropolitan area reported to the actual transaction price system of the Ministry of Land, Infrastructure and Transport, based on the same apartment and same area, the transaction price increased in July and August compared to the second quarter of this year (April to June) (the price increased from the previous transaction price). transactions) accounted for 55% of the total. Considering that under the same conditions, the proportion of upward transactions in the second quarter compared to the first quarter was 65%, the proportion of upward transactions has decreased. In Seoul, the proportion of upward transactions in July and August was calculated to be 62%, which decreased by 10 percentage points compared to the second quarter.

Although it has recently been on the decline, the amount of unsold units is also at a burdensome level. In July, the number of unsold homes nationwide totaled 63,087, a decrease of 3,301 households (5.0%) from the previous month, but there was a large difference in the decrease between the metropolitan area (16.3%) and the provinces (2.8%). Of the total unsold units, 54,253 households, or 86%, are under local government control.

“Policy effects such as recovery of housing prices, lifting of deregulation areas, easing of subscription regulations, and special housing loans.”

Real estate market experts cited deregulation as the ‘largest contributor’ to the real estate market recovery that began in earnest this year. In January of this year, the government also significantly eased regulations related to subscription, including removing the entire country except Gangnam, Seocho, Songpa, and Yongsan from regulatory areas and allowing non-priority subscriptions even for those who own a home. Starting in February , we launched the ‘Special Bogeumjari Loan’, a fixed-rate policy mortgage product that lends up to 500 million won up to 70 % LTV (60% DTI , not DSR ) for homes worth 900 million won or less . Regarding the recent housing price recovery atmosphere, Professor Lim Jae-man of the Department of Real Estate at Sejong University said, “This phenomenon occurred because the government mobilized all policies, such as easing loans such as special home loans and easing subscription regulations, to revive housing prices in a situation where transaction volume was extremely low.” “There are parts of the base effect that have been overestimated due to the extremely low performance,” he said. Kim Hyo-seon, senior real estate committee member at NH Nonghyup Bank, also said, “Although the domestic economic situation is not good this year, the real estate market is relatively good because the importance of real estate in the current domestic economy has increased and the government’s deregulation appears to have had an impact.” He added, “National housing transaction volume. This is evidenced by the fact that more than 90% of them, and more than 50% in Seoul, are low-priced properties under 900 million won, and since special housing loans are expected to run out in around October, this will have an impact on the market in the future.”

As a result of analyzing the status of apartment sales in Seoul, the proportion of transactions under 900 million won in the first quarter of this year accounted for 59% of all transactions. As quick sales have been quickly exhausted since the beginning of this year, the proportion has decreased to 52% in the second quarter, but the number of transactions under 900 million won in Seoul is increasing from 4,014 in the first quarter to 5,456 in the second quarter.

“The economic situation is not good, but house prices cannot continue to rise alone.”

Although some regions, such as Seoul, are quickly recovering their안전놀이터 previous highs, experts believe that the possibility of a further surge in housing prices in the future will be limited, considering the circumstances surrounding the market, such as the sluggish domestic and international economic situation and the still burdensome level of real estate mortgage loan interest rates.

Last year, per capita gross national income was $32,661 in dollar terms, down 7.7% from a year ago ($35,373), and economic growth also slowed from the 4% range to the 2% range. The upper end of mortgage loan interest rates is also approaching the 7% level.

Professor Lim Jae-man said, “Considering the worsening economic growth rate and potential growth rate, decline in national income and exports, and burdensome interest rates, the possibility of improvement in the domestic economy is limited, and the general judgment is that house prices cannot be the only increase in this situation.” He predicted, “Although transactions have revived to some extent due to the large-scale deregulation of the real estate market, house prices are unlikely to rise further because actual consumers are not in a position to purchase houses carelessly.” Park Won-gap, senior real estate expert at KB Kookmin Bank, diagnosed that “the market is currently showing mixed trends with mixed signals,” and added, “What is important is the emotional index, which is due to the exhaustion of properties for quick sale, rising loan interest rates, concerns about a reversal, and real estate PF (project

financing ) . “As transactions are slowing down due to risks, etc., the price rebound will be less resilient in the second half of the year compared to the first half,” he predicted. However, he added, “House prices are unlikely to fall significantly due to supply instability and high sales price issues.”

“Apartments in Seoul have been an investment financial product for a long time… market polarization expected to deepen”

Although the overall market is expected to take a breather, there are observations that polarization according to region and age, such as metropolitan areas such as Seoul and local areas, and new construction and construction, will deepen.

Kim Gyu-jeong, director of the Asset Succession Research Institute at Korea Investment & Securities, said, “After periods of instability and adjustment, the asset market unconditionally ends in polarization, and this situation seems to be especially likely to intensify.” He added, “Seoul apartments are an investment rather than actual value or living space.” “It has become an investment asset like other financial products, but considering concerns about future supply shortages, Seoul believes that the recovery trend is continuing to this day, but there is a possibility that the recovery trend will slow down in the future,” he predicted. However, regarding local areas, he predicted, “There is no sign that the recovery trend in the metropolitan area will extend to local areas, and for the time being, a ‘weak balance’ with a mix of ups and downs depending on the region will continue.”

There was a lot of advice for actual buyers that there was no need to be in a hurry, but that it would not be a bad idea to purchase if there was a price advantage considering the financial capacity.

Kim Hyo-seon, a real estate expert, said, “The possibility of a sharp rise in housing prices in the future is limited, so there is no need for end-users to rush.” He also added, “If the market calms down again in the future, low-priced properties may come out from homeowners who must sell, and they will focus on buying such urgent properties. “Although the sale price is recently set based on the market price, large-scale properties in major areas can expect a market profit after winning the subscription,” he said.

Park Won-gap, senior real estate expert, said, “Compared to the high point (October 2021), Seoul is up more than 25%,

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