Seoul villa transactions hit 5-year high in Q2 amid market recovery hopes

Seoul's market for non-apartments, such as villas and multi-unit dwellings, is showing renewed vigor with increases in both transaction volume and value. This resurgence is bolstered by the government's "August 13 Housing Quick Supply Measures," which aim to ease construction regulations and strengthen financial support for this sector.

Analysis of real estate transaction data reveals that in the second quarter, Seoul recorded 11,536 sales of multi-unit and multi-family housing, a 11.7% increase from the previous quarter and the highest since the third quarter of 2021. Transaction value also climbed 12.1% to 4.93 trillion won, marking the highest figure since the second quarter of 2021. Notably, 21 out of Seoul's 25 districts saw a rise in transactions, with significant growth in areas like Nowon, Gangbuk, and Dobong.

The price of non-apartments is also on an upward trend. Data from the Korea Real Estate Board shows that Seoul's multi-unit and multi-family housing prices rose 5.27% by July this year, the highest annual increase since 2008. This surge is comparable to the apartment market's growth and even surpassed it in April, when villa transactions were particularly high.

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This supply measure includes policies to revitalize non-apartment supply and stimulate demand. In the medium to long term, demand for non-apartments is expected to increase, particularly in areas with redevelopment prospects.

Market analysts suggest that villas are attracting interest from genuine buyers due to fewer restrictions, such as the absence of land transaction permit requirements and no mandatory residency periods. With rising apartment prices and deepening rental market difficulties in the Seoul metropolitan area, younger, financially constrained buyers are increasingly turning to more affordable non-apartments. Investment demand is also flowing into areas in the early stages of redevelopment.

The government views non-apartments as a key solution for stabilizing the housing market, given their faster construction times. The "August 13 Measures" outline a plan to start construction on 130,000 non-apartment units in the Seoul metropolitan area by 2030, through relaxed building codes and enhanced financial and tax incentives. These include increasing the allowable construction area for multi-family and multi-unit buildings and easing height restrictions. Financial support is also being expanded, with increased loan limits for construction and a new loan program for young buyers purchasing non-apartments under 400 million won.

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However, the structural issue of inverted rent (where rent exceeds the deposit) has not yet been resolved, which may limit price increases.