(Seoul = Yonhap News) Reporter Lim Ki-chang = With apartment sales prices in Seoul approaching the record for the longest period of increase in history, the variables supporting the upward trend are stronger than before, predicting that the upward trend will be maintained for a longer period of time.
According to the Korea Real Estate Agency on the 13th, weekly apartment sales prices in Seoul continued to rise for 83 consecutive weeks from the first week of February last year to the first week of September.
The longest existing increase is 85 weeks, from the second week of June 2020 to the third week of January 2022 during the Moon Jae-in administration.
This year, the weekly rate of change in apartment sales prices in Seoul is the lowest at 0.05% in the third week of March, influenced by the sudden sale of properties for sale ahead of the end of the heavy capital gains tax and deferral measures for multiple homeowners.
The increase rate in the first week of September, the most recent survey baseline, was 0.20%, and the trend of maintaining the 0.20% range for a month since August has continued.
Recently, the downward trend has continued in Gangnam 2 districts (Gangnam and Seocho-gu) due to policy uncertainties such as the tax reform plan that increases the tax burden on high-priced homes and single non-residential homes, acting as a factor limiting the overall increase.
However, the weakness in the Gangnam area is also likely to be a short-term trend, and the prevailing observation is that it is unlikely that the overall average in Seoul will turn downward even temporarily over the next two weeks.
The economic environment surrounding the real estate market has both similarities and differences.
In the past, when housing prices in Seoul rose for a long period of time, low interest rates and abundant liquidity played a role.
In order to respond to the economic downturn caused by the coronavirus pandemic, the Bank of Korea implemented a 'big cut' in March 2020, lowering the base interest rate by 0.50 percentage points from 1.25% to 0.75%. Then, in May of the same year, the base interest rate was further reduced to 0.50%, dropping by 0.75% in two months.
Afterwards, the Bank of Korea began raising the base interest rate again in August 2021, and in January 2022, coinciding with the time when it returned it to the pre-corona level of 1.25%, the rise in apartment prices in Seoul also stopped.
Recently, the Bank of Korea raised the base interest rate twice in a row, raising it to 3.00% per year. In addition to price stability, it also means responding to the rising housing prices in the metropolitan area and the increase in household debt.
However, the prevailing analysis is that the impact of interest rate increases is limited compared to before, as abundant liquidity, such as large-scale performance bonuses and stock profit-taking funds from major companies due to the boom in the semiconductor industry, is being concentrated into real estate.
Nam Hyeok-woo, a real estate researcher at Woori Bank, said, "In terms of liquidity in the asset market, the current situation appears to be much more advantageous than the past upward period. Even though the absolute interest rate level is different, there are differences in the underlying environment such as the semiconductor boom and increase in gross domestic product (GDP), so market purchasing power is higher now than before."
As for regulations to stabilize housing prices, it is unclear whether additional regulations will emerge as major measures ranging from lending to expansion of regulated areas and tax reform have already been introduced in the past year.
In June of last year, when the current government took power, in order to respond to the overheating of the Seoul apartment market, mortgage loans were tightened through the June 27 loan regulation to respond to the overheating of the Seoul apartment market. In the second half of the year, through the October 15 measure, the entire Seoul and 12 regions of Gyeonggi-do were grouped into regulation areas (areas subject to adjustment, overheated speculation districts) and land transaction permission zones, and even differentiated loan limits by housing value.
This year, a tax reform plan was introduced to increase the tax burden on owners of ultra-high-priced homes and non-residential single-home owners, but as public opinion deteriorated, a relaxed government plan emerged, and there is a possibility that additional changes will be made during discussions in the National Assembly.
The phase in which both sales and jeonse are under upward pressure is similar to the previous upturn.
In 2021 and 2022, when the impact of the enforcement of the Lease Act, such as the right to request contract renewal and the monthly rent cap system, was seen, there were many cases of tenants and those who did not own a home turning to sales due to a decrease in jeonse listings and a surge in jeonse prices.
As a result, prices in these areas have risen significantly as demand has been concentrated in low- to mid-priced areas, such as the outskirts of Seoul, where the burden of financing is relatively less, and a similar situation is being repeated this year.
As the shortage of rentals due to the decrease in the number of new construction in Seoul is expected to be difficult to resolve for the time being, the trend of renters switching to purchases and driving up housing prices in the lower and middle class is expected to continue in the future.
This year, the highest cumulative growth rate by autonomous district in Seoul is occupied by regions that were classified as lower than mid-level, such as Seongbuk-gu (13.52%), Guro-gu (11.06%), Gangseo-gu (11.01%), Seodaemun-gu (10.93%), and Gwanak-gu (10.40%).
Considering this environment, the prevailing view is that the upward trend in apartment prices in Seoul will continue longer than in the past.
An expert who requested anonymity said, โIn a situation where there is so much money that can be released into real estate, such as the stock market capitalization, which has increased incomparably compared to the past, the policy tools that can be used to control house prices are limited,โ and added, โIt is highly likely that the period of increase will be much longer than before.โ
