Real estate is still really depressed
The prices of jeonse, or long-term rental deposits, have continued to soar to the point that jeonse values have reached an all-time high compared to the actual selling price of an apartment or house.
According to a report by the Korea Development Institute released yesterday, Seoul’s housing values in the second quarter dipped 1.8 percent compared to the same period last year. That’s the sharpest drop compared to other major cities including neighboring Gyeonggi, where values fell 1.2 percent during the April-June period.
Even when compared to the previous quarter, apartment prices retreated 0.6 percent. Gangbuk apartment prices fell sharper than apartments in the more posh neighborhoods south of the Han River such as Gangnam.
The reported also cited a drop in apartment transactions.
A year ago, apartment transactions went up sharply largely because a temporary acquisition tax cut by the Lee Myung-bak administration to boost the market was coming to an end at the end of June. This prompted buyers to seek out apartments to buy.
As a result, apartment transactions in Seoul fell 20.2 percent compared to the same period last year to 31,679. Apartments bought in Seoul accounted for 13 percent of the nation’s overall transactions made in the April-June period. Even when compared to the first quarter, the number was down 7.6 percent.
While Seoul prices were down, apartment prices elsewhere in the nation improved somewhat. They fell 0.2 percent compared to the same period last year but rose 0.8 percent compared to the first three months of this year. Even Gyeonggi inched up 0.6 percent quarter-on-quarter.
Daegu saw the sharpest gain in the second quarter as prices soared 7.4 percent.
Unlike Seoul, where apartment prices have been falling since the global financial meltdown of 2008, Busan and Daegu apartment prices have been steadily increasing since 2011, the report noted.
It added that in the case of Daegu, there was growing demand for new small and midsize apartments in the first half of this year.
The study also found that jeonse prices reached new heights for apartments in Seoul in the second quarter.
During the period, jeonse prices were the equivalent of 64 percent of the actual value of apartments in Seoul. This new record level compares to only 38.2 percent in 2009.
However, there are signs the real estate market is improving.
Although transactions are still limited, buyer sentiment is improving, according to a recent report by Budongsan 114. It said housing transactions in the greater Seoul area have been rising for four consecutive weeks and that apartment prices in Seoul rose 0.03 percent last week compared to the previous week.
BY lee ho-jeong [firstname.lastname@example.org]