Apartment prices slump, says study

The values of about 4 percent, or 270,000, of apartments sold in the first month of the year have dropped, according to a study by the real estate information provider Budongsan 114.

Budongsan 114 based its study on 7 million apartment sales across the country and compared the values from the end of last year up until Feb. 5.

Across the country, Daegu suffered the most. One out of every 10 apartment units saw its value slide. Some 12.1 percent, or 50,266 units out of 415,488 units in the southern city, saw their values diminish.

Overall, North Gyeongsang, where Daegu is located, saw apartment values retreat compared to the end of last year. The study showed that out of 22,161 apartment units in the province, 8.4 percent lost value.

Seoul wasn’t safe either as the value of 5.8 percent, or 74,028 apartment units out of the total 1.27 million, fell. In the greater Seoul area, 3.1 percent or 64,061 units out of 2 million, saw prices decline.

However, some areas enjoyed an increase in apartment values. Out of the total of 550,261 apartment units sold in Busan, 11.5 percent or 63,483 saw their values rise. Only 1.6 percent, or 8,953 units, saw their values drop.

Among the apartments whose value retreated, nearly half or 45.7 percent (124,436 units) were midsize apartments between 60 and 85 square meters (646-915 square feet). Small size apartments of 60 square meters or less accounted for 36.3 percent or 98,990 units with less value.

The decline is largely because in recent years the supply of such apartments increased considerably as home buyers have been avoiding large apartments since the global crisis of 2008. Ninety percent of the apartments that are due to be completed this year are small and midsize apartments.

The value of 68.7 percent of apartments dropped less than 10 million won, out of the total number of apartment units whose values fell this year.

“As the government tightened the regulations on loans, housing demands have shrunk and recently the oversupply of apartments and shrinking transactions have resulted in lowering apartment values,” said Kim Eun-jin, head of the Budongsan 114 research team.

“The price adjustment in Daegu and North Gyeongsang was inevitable as these regions have enjoyed a continuous rise of apartment values over the years.”

In addition, 91.9 percent or 6.43 million apartments saw their values remain unchanged, while 4.2 percent or less than 300,000 saw their values go up.

BY CHOI HYUN-JOO [lee.hojeong@Joongang.co.kr]