Signs of renewed buying activity are emerging in Seoul's apartment market, which had been sluggish during the summer. However, buyer sentiment remains weak, and with an increase in available listings, it is uncertain whether this recent activity will lead to a recovery in transactions by year-end.
According to the Seoul Real Estate Information Plaza, the total number of apartment transactions in Seoul from January to August this year was 49,101, a 5.6% decrease from 51,997 during the same period last year. Monthly transaction volumes rose from 5,373 in January to 8,665 in April and 8,988 in May, but then contracted again. After dropping to 5,321 in June, transactions fell sharply to 3,577 in August, a 60.2% decline compared to May.
Despite the significant drop in summer transactions, recent signals indicate a potential revival in buying activity. On October 16, the city of Seoul announced that the number of new land transaction permit applications for September rose to 3,678, a 24.1% increase from the previous month (2,963), marking the first rebound in five months.
Land transaction permit applications occur after sellers and buyers negotiate terms, indicating a closer step to actual transactions compared to mere inquiries. The increase in applications suggests that some buyers who had been waiting on the sidelines are now moving forward with transactions.
However, buyer sentiment remains weak. According to KB Real Estate, as of October 12, the Seoul apartment purchase sentiment index stood at 69.5, down 3.8 points from the previous week. Notably, the index for the 11 districts of Gangnam hit a seven-month low of 61.7. While land transaction permit applications have increased, a proactive trading atmosphere among buyers has yet to materialize.
The rise in available listings also poses a challenge for transaction recovery. According to the real estate big data platform Asil, as of today, apartment listings have increased in 24 out of 25 districts in Seoul, excluding Jongno-gu. The most notable increases were seen in Gangdong-gu (6.9%), Seongdong-gu (5.9%), and Seongbuk-gu (5.8%).
While an increase in listings does not inherently indicate a market downturn, if buyer demand fails to absorb the new supply, the pace of transaction recovery could slow. Analysts suggest that ongoing loan regulations and high housing prices may delay buyers from entering into contracts.
Shin Bo-yeon, a professor at Sejong University’s Department of Real Estate AI Convergence, stated, "Demand is present, but cash availability is lacking. As transaction volumes decrease, prices are gradually rising."
Conversely, the worsening rental crisis may prompt some tenants to shift to the purchase market. If the shortage of rental listings and rising rental prices continue, it could lead to increased buying activity among financially capable prospective buyers.
Park Seon-gu, an economist at the Korea Construction Policy Institute, noted, "The delay in purchasing due to rising sale prices, the demand for relocation due to redevelopment projects, and a decrease in new supply are exacerbating the shortage of rental properties. In the fourth quarter, a strong rental market and a recovery in consumer sentiment could lead to an increase in housing purchases."
* This article has been translated by AI.
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