Housing prices for apartments in the Seoul metropolitan area have risen for the 19th consecutive month, while the number of building permits has decreased by 7.9%. As mortgage rates rise, concerns have been raised that the overall market improvement cannot be attributed solely to price recovery, especially with unsold properties accumulating in regional areas.
On September 24, the Korea Construction Industry Institute reported that apartment sales prices in the Seoul metropolitan area increased by 0.69% in August compared to the previous month. Although this is a decrease from the 0.97% increase in July, it marks 19 months of continuous growth since February of last year.
In contrast, apartment prices in regional areas rose by 0.11%, marking a 16-month consecutive increase since May of last year. By region, the five major metropolitan cities saw a 0.13% increase, while the eight provinces, including Sejong, experienced a 0.07% rise.
However, actual transactions have slowed down. In July, the number of housing transactions in the Seoul metropolitan area was approximately 35,000, a decline of over 10% from the previous month. In regional areas, transactions totaled 28,436, down 4.4% from the previous month. Compared to the same month last year, regional transaction volume decreased by 3.7%.
The fixed-rate mortgage interest for new loans in July was 4.76%, up 0.81 percentage points from 3.95% in July of last year. The variable-rate mortgage interest was recorded at 4.35%, while the jeonse loan interest rate was 4.19%.
Building permits, a leading indicator of supply, fell below last year's levels. From January to July this year, a total of 142,328 housing permits were issued nationwide, a 7.9% decrease from 154,571 permits during the same period last year.
The regional disparity is significant. In the Seoul metropolitan area, permits decreased by 3.9% to 80,586, while permits in regional metropolitan cities increased by 31.6% to 42,700. However, the eight provinces saw a dramatic 50.3% drop from 38,281 permits last year to 19,042 this year.
In regional areas, unsold housing is accumulating. As of July, there were 68,217 unsold homes nationwide, an increase of 1.1% from the previous month and 9.6% from the same month last year. Of these, 19,459 were in the Seoul metropolitan area, while 48,758 were in regional areas.
Among these, 29,152 homes have been completed but remain unsold, with 24,708 of these located in regional areas, accounting for about 85% of the total. Although this figure has decreased from 30,429 in February, it has increased by approximately 8% compared to the same month last year.
Consumer expectations for prices and business sentiment among real estate firms are diverging. In August, the apartment sales and purchase index for the Seoul metropolitan area was 105.9, higher than the regional index of 94.7. The Bank of Korea's housing price outlook consumer sentiment index (CSI) stood at 125, exceeding the baseline of 100. This index rebounded after falling to 96 in March.
Conversely, the business sentiment index for the real estate service industry was only 65.5 in the second quarter. The business conditions index (BSI) for the real estate sector in July was 74, falling below the baseline of 100.
In August, nationwide apartment rental prices rose by 0.44%, while monthly rents increased by 0.42%. In the Seoul metropolitan area, these figures were 0.78% and 0.68%, respectively, indicating a larger increase than in regional areas. Of the total 210,975 rental transactions in July, 67.6% were monthly leases.
Kim Seong-hwan, a researcher at the Korea Construction Industry Institute, assessed the third-quarter market, stating, "There is a clear temperature difference between the indicators." He emphasized the need for policy attention to address the supply-demand imbalance in regional areas regarding unsold properties.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.