Seoul Apartment Prices Show First Decline in 7 Months; Caution Urged on Real Estate Policies

The recent dip in Seoul's apartment transaction prices, predicted to be the first decline in seven months, offers a glimmer of hope that the government's real estate policies might be taking hold. The anticipated reinstatement of capital gains tax hikes for multiple homeowners on May 10th has spurred an increase in distressed sales, particularly in the coveted southeastern Seoul region, which saw a significant drop of 2.96% in its real transaction price index.

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The real transaction price index for Seoul apartments, based on contracts signed in March, fell 0.59% from the previous month.

However, this development should not be cause for complacency. While the real transaction price index shows a decline, the broader apartment price index, which includes both actual transactions and asking prices, continues its upward trend for the 61st consecutive week. This suggests a market still grappling with underlying inflationary pressures, with demand now shifting towards non-Gangnam areas as high-priced apartments in Gangnam face adjustments. The government must remain vigilant, monitoring the market closely for any signs of speculative panic driven by the upcoming tax changes and the fear of 'frozen' inventory.

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This is the first time the real transaction price index has fallen since August last year (down 0.07%), a period of seven months.

Since June, the administration has rolled out four major real estate policies, including the extension of the capital gains tax hike deferral and the prohibition of new mortgage loans for multiple homeowners. While these measures appear to be contributing to a cooling of the market, the Hankyoreh urges the government to maintain its resolve. Continuous monitoring of market trends and the readiness to implement supplementary measures are crucial to achieving sustainable stability and preventing a resurgence of speculative activity. The focus must remain on thorough implementation of existing policies and the development of new strategies to ensure long-term market health.

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The decline was steepest in the southeastern region, which includes the three Gangnam districts (Seocho, Gangnam, Songpa), falling by 2.96%.