Home prices to drop 1.5% next year on inflation, market concerns

Apartment buildings in Korea [YONHAP]

Average home prices in Korea are expected to decline by 1.5 percent next year, while Seoul stands in contrast with expectations of a 1 percent increase, a report showed Friday.

The Korea Housing Institute attributes the expected overall drop in average home prices to a combination of high interest rates, escalating inflation and market concerns surrounding real estate project financing.

The average price of jeonse, a two-year home rental system unique in Korea, is forecast to advance 2.7 percent next year due to a lack of housing supply, it said.

In particular, the jeonse price in Seoul is predicted to grow 4 percent next year, according to the report.

The institute said around 650,000 homes will be traded next year, up 20 percent from this year but still lower than the annual average of 980,000 residential properties traded between 2017 and 2021.

BY SEO JI-EUN, YONHAP [seo.jieun1@joongang.co.kr]