After the government's June 27 household debt measures were announced, the price of apartments in Seoul has turned to decline.
According to Real Estate R114 on 4th, the national apartment sales price in the first week of July rose by 0.02% compared to the previous week. The increase was significantly smaller than last week's increase of 0.27%. In Seoul, prices fell by 0.02%, marking a turn from an increase of 0.54% the previous week.
The Gyeonggi and Incheon regions increased by 0.09%, continuing the upward trend in the metropolitan area, which rose by 0.03%. The five major metropolitan cities increased by 0.01%, while other regions saw a decline of 0.09%. Among the 17 cities and provinces nationwide, there were 10 areas with increases, 2 steady, and 5 areas with declines, indicating that the areas with increases were dominant.
By region, Sejong (-0.63%), Ulsan (-0.29%), Gangwon (-0.05%), North Jeolla (-0.05%), and Seoul (-0.02%) saw decreases, while Gyeonggi (0.09%), Incheon (0.09%), Daejeon (0.08%), South Gyeongsang (0.06%), and Gwangju (0.06%) showed increases in that order.
The national apartment rental prices increased by 0.06%, maintaining last week's increase. Seoul rose by 0.08%, the metropolitan area by 0.07%, Gyeonggi and Incheon by 0.06%, the five major metropolitan cities by 0.02%, and other regions by 0.01%, showing upward trends in the major areas. Among the 17 cities and provinces, there were 14 areas with increases and 3 with declines, indicating that the areas with increases were dominant.
Real Estate R114 noted that "as the government took measures to fix the housing collateral loan limit in the metropolitan area at 600 million won through the June 27 measures, the volatility has significantly shrunk starting from Seoul, which was leading the increase."
The fact that Seoul's apartment sales price rose by 0.54% last week, recording the largest increase this year, then turned to a decline this week shows a significant volatility. Real Estate R114 explained that "the price data is based on a sample of 1.57 million apartments (excluding rentals) in Seoul, and with the introduction of AI (artificial intelligence) pricing service from 2024, the speed of correlation between asking prices and actual transaction prices is expected to be very fast."
It also stated that, "based on the Real Estate R114 price data, the average price of apartments in Seoul is 1.46492 billion won, which would allow for loans exceeding 1 billion won under the assumption of a 70% loan-to-value (LTV) ratio. However, due to the impact of this measure, an additional cash requirement of over 400 million won has arisen, indicating that only those with cash holdings of 800 million won or more may be able to secure their own home in major areas of Seoul. In fact, among the 1.71 million apartments in Seoul (excluding rentals), 1.28 million, or 74%, are confirmed to be affected by the reduced loan limits, with impacts expected in 18 out of the 25 districts across the city due to this liquidity contraction measure."