Are Gangnam House Prices Falling? Experts Point to 'Statistical Trap'

One year has passed since mortgage regulations were implemented in regulated areas across the metropolitan area.

As Seoul apartment prices rose for 87 consecutive weeks, setting a record for the longest upward streak ever, analysis shows a divergence between forecasts of a sharp housing market drop and actual market trends.

With the supply of jeonse (lump-sum deposit lease) properties drying up and the shift to wolse (monthly rent) accelerating, the average monthly rent in Seoul has surpassed 1.63 million won.

Real estate experts appearing on SBS News Hunters first evaluated the policy impacts over the past year as follows.

[Kim Je-kyung, Director, Toomee Real Estate Consulting: The policies were wrong. If the policies had been right, real estate prices should have stabilized by now as we approach the one-year mark. To sum it up with figures, one of the longest consecutive upward streaks during the Moon Jae-in administration was 85 weeks, but the Lee Jae-myung administration has broken that record.]

Regarding the perspective that downward signals are recently emerging centered around the Gangnam 3 districts, experts pointed out that it could be a statistical trap.

[Park Si-dong, Economic Commentator: The transaction proportion of high-priced apartments worth 2.5 billion won or more has dropped to 5.8%. So at a glance, sales prices seem a bit lower and the transaction proportion seems lower, making it look like the market has peaked out, but there seems to be a statistical trap here. Usually, the monthly average number of apartment transactions in Seoul fluctuates around 6,000 to 7,000, and in May, it even exceeded 9,000. Now in September, it has dropped to the 2,400 range. Overall transactions have plummeted sharply, and because they dropped, the proportion of high-priced apartments among them decreased, but it is a bit difficult to view this as Gangnam trending downward.]

When asked whether the phenomenon of decreasing jeonse and increasing wolse can be seen as part of the housing price stabilization process, they responded as follows.

[Park Si-dong, Economic Commentator: It is actually just because there is no jeonse. Jeonse properties are not coming out. There are literally no properties right now. Compared to a year ago, jeonse listings have actually decreased by 18.8%. If we filter that 18% down to upper-tier locations or places with good living environments that people actually want, the ratio goes even higher. We must view the situation pessimistically—that jeonse is not disappearing as a trend, but has literally entered a state of extreme scarcity, forcing people to reluctantly settle for wolse.]

Skepticism was raised regarding Korea Land and Housing Corporation (LH) President Lee Sung-hoon mentioning the possibility of a sharp drop in housing prices by the end of the year during the parliamentary audit by the Land, Infrastructure and Transport Committee on the 13th.

[Lee Sung-hoon, President, Korea Land and Housing Corporation (LH) (on the 13th): If house prices continue to rise, people would have to compete to buy houses, but once they stabilize, you don't suffer losses even if you don't buy a house right away. Since house prices may not continue to rise and could drop significantly, you can think of this as advice given with that point in consideration.]

[Kim Je-kyung, Director, Toomee Real Estate Consulting: It's a lie. It's an obvious thing to say. If prices were really going to drop, I saw an article today saying that LH President used to own multiple homes and quickly reorganized into a single-home owner, but if prices are truly going to drop, shouldn't he dispose of even his remaining single home and become a homeowner with zero properties?]

Opinions were divided on the possibility of further tightening mortgage regulations.

[Park Si-dong, Economic Commentator: Even in the current situation, the base interest rate looks more likely to go up than down. Ultimately, for actual end-users and ordinary citizens burdened with loans, their additional burdens are growing, and tightening further from here is actually quite difficult realistically.]

[Kim Je-kyung, Director, Toomee Real Estate Consulting: When real estate industry experts talked among themselves, there was open talk that additional loan regulations would be implemented. Because ever since the June 27 real estate measures came out, I said on broadcast back then that people should be grateful when they get a 600 million won loan. Sure enough, as time passed and the October 15 real estate measures came out, it went down to 600 million, 400 million, and 200 million won, and they tightened loans once more.]

When asked how policies should be changed to curb housing prices, they replied that regulatory measures should be lifted.

[Kim Je-kyung, Director, Toomee Real Estate Consulting: Actually, all the regulatory measures announced by the Lee Jae-myung administration should be lifted. We need to make our goal clear—whether we really want to curb housing prices or stabilize jeonse and wolse. Regardless of whether the policy demanding that everyone live in their own home is right or wrong, it has become so obvious that it creates a very bad situation for jeonse and wolse tenants. If this state continues, a sharp surge in jeonse and wolse prices as the autumn moving season kicks into full swing appears to be a fait accompli.]

(Reported by Lee Seyoung | Video by Kim Na-on | Source: News Hunters | Produced by SBS Digital News)
※ Please note: This article was translated by AI and may contain errors.