Housing Market in Seoul Metropolitan Area Become Frozen Rapidly

Housing market in Seoul metropolitan area shows to freeze at fast speed such as decreasing of the total units of construction and dropping of applying rate for housing. Some sources forecasted that the price of apartment would increase by 0.5% in the next year.

On the 6th, according to Ministry of Construction & Transportation and the industry concerned, the number of apartment transactions in the third quarter of this year was 53,128 cases dropped by 8% compared to the same period of the last year of 57,280 cases.

Kim Sun-duk, the Director of Construction Industry Strategy Research analyzed “Considering rapid increase of apartment price in the third quarter by 9.6%, the reduction of transaction reflects that the real estate market enters in the early stage of stagnation.”

Total area permitted for housing construction acting as pre index of housing market has declined for a few consecutive months.

For a month of September the area permitted for housing construction was 3.67 million square meters declined by 18.6% compared to the same period of the last year of 4.52 million square meters.

Housing construction that had increased in the first quarter by139.3% compared to the same period of the last year began to slow the rate and declined 3.7% in October instead and declined by 18.5%.

On the 6th, Construction & Economy Research Institute of Korea ▽the increase of new housing ▽decrease of demand for housing ▽construction of consumers` confidence may cause to stabilize the price of apartment in whole nation by increasing of 0.5%. Also the rent for housing is forecasted to increase by only 2.1%.

Considering the forecast of KDI of 3.6% increase of consumer price index in the next year, it means that real housing price declines.

Kim Hyun-a, research of Construction & Economy Research Institute of Korea spoke “If the economy become worsened, the increasing rate of housing price itself can become minus, in other words, the price can drop.”

Jae-Seong Hwang jsonhng@donga.com