Property market in Korea shows signs of life amid uncertainty

A view of the Seoul apartment from Lotte World Tower observatory in southern Seoul Sunday. [YONHAP]

 
Property prices and the number of transactions have recovered this year following a series of deregulation measures, while uncertainties remain due to monetary tightening and economic weakness.
 
Through Feb. 19 this year, 72 units were purchased at a higher price than in the fourth quarter of last year, when housing prices nosedived, according to data from the Ministry of Land, Infrastructure and Transport.  
 
The price increase was especially evident in southern Seoul.  
 
A 149-square-meter (1,603 square feet) Trizium apartment in Songpa District in southern Seoul was traded at 2.85 billion won ($2.2 million) last October. But it was traded at 3.4 billion won last month. An 83-square-meter unit at Gaepo Jugong Complex 6, which was purchased at 1.9 billion won in December, was sold for 2.3 billion won last month.  
 
Apartment prices in some regions continued to fall.  
 
A 140-square-meter unit at Banpo Jugong Complex 1 in southern Seoul was traded for 6.6 billion won in December, but it went for 5.45 billion won last month. An 83-square-meter Raemian Gongdeok Complex 4 unit in Mapo District, western Seoul, was sold for 1.2 billion won in January, down from 1.48 billion won in a month earlier.  
 
One of the factors is interest rates.  
 
The possibility of more monetary tightening is continuing to affect the property market.  
 
Monthly producer prices in the United States increased by the most in seven months in January. U.S. inflation slowed to 6.4 percent in January, but that was still higher than the 6.2 percent expected.
 
The Bank of Korea is holding a Monetary Policy Board meeting on Thursday. Korea’s current base interest rate stands at 3.50 percent.
 
“Interest rates at banks are falling under the guidance of the financial authorities, but it will be at least the end of the first half of the year when the rate increase starts to end,” said Park Hab-soo, an adjunct professor at Konkuk University Graduate School of Real Estate. “So a fall in housing market is expected to prolong for some time.”
 
The number of housing transactions made in Seoul rose from last year, but there were still fewer than when before the market started to fall.
 
The number of housing transactions in Seoul was 1,317 last month. That is more than the monthly average of about 1,000 last year, but it is still far lower than 6,749 in 2020 and 3,498 in 2021.  
 
The number of unsold houses as of December last year reached 68,107 units, surpassing the 62,000 units, which is the level that the government considers a breaking point for the industry.  
 
“Houses that need to be sold urgently are being traded centered on people who plan to live in the unit,” said Seo Jin-hyung, a professor of business at Kyung-In Women’s University. But “the falling property price is highly likely to continue as the internal and external environment, like the high interest rate, hasn’t changed much.”
 

BY KIM WON, JIN MIN-JI [jin.minji@joongang.co.kr]