After election, some hope for higher apartment prices

Prices of apartments on sale and for rent are posted at a real estate agency in Seoul. [NEWS1]

Property owners trying to sell apartments are pulling back in hopes of higher prices if the president-elect loosens real estate regulations.

In Seoul, the number of apartments up for sale has fallen since the presidential election.

According to real estate big data company Asil, a total of 49,231 apartments were up for sale in Seoul on March 15, a 1.8 percent decline from 50,131 on March 9, the day of the election.

Among the 25 districts in Seoul, 23 districts saw declines in the number of residential units offered for sale. The only two that didn’t were Guro and Yeongdeungpo districts.

Yongsan saw the sharpest decline, 4.4 percent. Gangbuk was next with 3.8 percent and Gwangjin took third place with 3.6 percent.

Seocho District, Gangnam District and Songpa District, the three most upscale districts in Seoul, reported declines of 3.5 percent, 2.8 percent and 0.8 percent respectively.

The withdrawal of apartments for sale was sparked by the election victory of Yoon Suk-yeol, who vowed to roll back Moon Jae-in administration real estate policies.

The Moon government tried to curb soaring real estate prices by tightening the mortgage market, increasing taxes and controlling rent increases.

The result was the opposite of what it intended: property prices continued to rise at an unprecedented pace.

Yoon has promised to lower property taxes and ease regulations on loans and redevelopment, ramping up residential real estate supplies in the long term.

Demand for apartments is showing signs of rising.

“More customers are visiting to ask about the real estate market since the election,” said a realtor in Mok-dong, western Seoul.

“Though it didn’t lead to actual sales so far, there was a customer willing to buy if [the Yoon administration’s] plan to relax regulations is fleshed out,” the realtor said.

Property prices in areas slated for redevelopment were soaring even before the election. In January, the Seoul Metropolitan Government announced it was ending a regulation that kept apartment buildings at 35 stories in areas near the Han River.

The Jamsil 5 Danji apartments in southern Seoul are set for redevelopment in accordance with the regulation change.

During the campaign, Yoon also promised to increase the floor area ratio for redevelopment, the ratio of a building's total floor area to the size of the land upon which it stands, from the current 300 percent to 500 percent.

This will allow redeveloped apartments to build many more units.

An easing of real estate regulations is likely to fuel redevelopment projects that have been struggling.

Some analysts say the number of apartments up for sale is likely to shrink more as it would take some time before Yoon’s campaign pledges are implemented as policies.

Yoon will take office in May.

The outcome of local government elections in June is another factor.

If Yoon's People Power Party wins Seoul local elections, it would give more leverage with the rival Democratic Party.

“Many of Yoon’s campaign pledges [on real estate] need legislative revision, which requires cooperation from the Democratic Party, which controls the majority in the National Assembly,” said Seo Jin-hyeong, professor of public administration at Kyung-in Women’s University and the president of Korea Real Estate Society.

BY KIM WON [shin.hanee@joongang.co.kr]