Seoul Apartment Price Surge Moderates as New Housing Policy Sparks Caution

Seoul's apartment market is showing signs of cooling, with the rapid pace of price increases slowing for the first time in four weeks. In the fourth week of May (as of May 25th), Seoul apartment prices rose by an average of 0.25%, a decrease from the 0.31% increase recorded in the previous week. This marks a shift after three consecutive weeks of accelerating growth.

The primary driver behind this slowdown appears to be a new government policy implemented on May 29th. This measure allows homeowners who have sold their property to a buyer intending to use it for self-residence to delay their actual move-in if the property is currently occupied by a tenant. This is expected to lead to an increase in the number of available listings as homeowners navigate the new rule, prompting potential buyers to adopt a more cautious, wait-and-see attitude.

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Localized price increases are occurring centered on complexes undergoing reconstruction and large complexes, but in other areas, the wait-and-see attitude of sellers and buyers is strong.

While localized price increases were observed in areas with ongoing reconstruction projects or in large apartment complexes, the broader market sentiment has shifted towards observation. The Korea Real Estate Board noted that outside of these specific areas, both sellers and buyers are adopting a more hesitant stance. Although the Gangnam 3 districts (Gangnam, Seocho, Songpa), which had seen price rebounds after the expiration of a capital gains tax deferral for multi-homeowners, still recorded increases, their growth rates also moderated this week.

Seoul's jeonse market, similar to the sales market, also experienced a slight moderation in its rate of increase, rising by 0.26% compared to 0.29% the previous week. Despite this, demand for rentals remains strong, particularly in desirable locations like large complexes and near subway stations, where a backlog of prospective tenants continues to accumulate. Areas like Seongbuk-gu, Seongdong-gu, Songpa-gu, Dobong-gu, Gwangjin-gu, Nowon-gu, and Gangseo-gu saw above-average increases in jeonse prices.

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Inquiry from tenants continues to increase, and in desirable complexes and areas near subway stations, waiting demand has accumulated.