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Apartment prices drop for four weeks following tightened regulations, political unrest

Published: 12 Dec. 2024, 17:29

JIN EUN-SOO
[email protected]

Apartment complexes in Seoul on Dec. 1 [NEWS1]

Apartment prices across Korea slid for four consecutive weeks, weighed down by tightened lending regulations and intensifying political unrest that have dampened buyer sentiment in the real estate market.

While Seoul continues to show signs of resilience, those outside the capital have struggled to regain momentum.

Apartment prices in Korea dropped by 0.03 percent in the second week of December, marking a larger decline than the previous week’s 0.02 percent decrease, according to data the Korea Real Estate Board released Thursday.

The drop in prices of regional apartments also widened from 0.04 percent to 0.05 percent during the same period. Apartment prices in the capital area turned flat, putting a stop to seven consecutive months of upward movement.

“Demand has been maintained in select apartment complexes, such as those that have reconstruction coming up, but mostly there are only little inquiries about apartment trades due to tightened lending regulations,” said an official from the real estate board.

The upward trend in Seoul apartment prices slowed in the second week of December, dropping from a 0.04 percent increase to just 0.02 percent. Those prices have been on a downward trajectory since the second week of October, when the uptrend peaked at 0.11 percent.

The amplified market uncertainties stemming from the political turmoil sparked by President Yoon Suk Yeol's marital declaration last week also weakened buyer sentiment, as a possible transition of administration would mark a dramatic turn in real estate policies.

Apartment prices in Gangdong District, eastern Seoul, dropped by 0.02 percent this week after shifting to a downward trend for the first time among 25 districts in Seoul last week.

The sale prices of apartments in Dongdaemun District, eastern Seoul; Eunpyeong District, northern Seoul; Seodaemun District, western Seoul; and Dongjak District, southern Seoul, all fell by 0.01 percent, joining the downward trend.

The occupancy outlook for new apartments also showed slow demand.

The occupancy outlook index that measures market conditions, demand for housing and the financial situations of those who purchase presale units has shown a sharp drop. While a figure above 100 signals positive outlook, the index for apartments in capital area dropped to 90.6 in December from the previous month's 101.9. Seoul-based apartments showed the index indicating a move to 100 from 105.2 during the same period.

Meanwhile, the Korean government suggested the provision of at least 250,000 state-funded housing units next year, the largest-ever scale yet to date, in its attempt to vitalize the real estate market, which has continued to show a mismatch between supply and demand lately.

The Ministry of Land, Infrastructure and Transport said Thursday said that it aimed to supplying 252,000 public housing units next year, 20 percent of which it aims to receive approval for in the first half of the year.

It aims to break ground on 70,000 homes next year compared to 200,000 units this year.

“In order to give confidence to people about the continuous supply of housing, the public sector has to do its job better than expectations,” said Land Minister Park Sang-woo.

BY JIN EUN-SOO [[email protected]]