Seoul Apartment Transactions Plunge 60% in August as 90% Occur Outside Gangnam Districts

Woori Bank: "Impact of Lending Regulations and Tax Uncertainty"

"Wide Gap Between Buyers and Sellers Makes Transaction Contraction Unavoidable"

Last month, the volume of apartment transactions in Seoul plummeted by nearly 60% compared to the previous month, with the proportion of transactions in the three Gangnam districts dropping below 10%. There are growing projections that, due to lending regulations and tax reforms, the contraction in transactions will be unavoidable for the time being.

On September 7, Woori Bank analyzed the actual transaction price disclosure system of the Ministry of Land, Infrastructure and Transport and found that apartment transactions in Seoul for August amounted to just 2,322 contracts (based on contracts dated up to September 4). While there are still some remaining reporting deadlines for actual transactions, this figure represents a 60% drop compared to 5,800 cases in July, suggesting that a broad market contraction appears inevitable.

Apartment transaction volumes in Seoul recorded 8,659 in April and 8,962 in May, but then shrank to the 5,000 range in June (5,289 cases) and July (5,800 cases), and fell even further to the 2,000 range in August.

According to Woori Bank, this sharp decline in transaction volume was due to stringent lending regulations, the government’s August 3 tax reform proposal, and two rounds of base interest rate increases, all of which have led both buyers and sellers to take a wait-and-see approach.

The contraction in transactions was especially pronounced in the Gangnam area. The share of apartment transactions in the three Gangnam districts—Gangnam, Seocho, and Songpa—rose to 15.2% in April and 16.1% in May, but dropped to 9.1% in August, marking the lowest level so far this year.

The effects of regulation were also clearly apparent when looking at transaction volumes by price range. The proportion for the KRW 900 million to KRW 1.5 billion range dropped from 31.8% in January to 26.6% in August, while the share for apartments priced above KRW 1.5 billion fell from 21.07% to 19.08% during the same period.

In contrast, the proportion of transactions for apartments in the KRW 300 million to KRW 600 million range rose from 16.97% to 21.32% over this period, and the share for apartments under KRW 300 million increased from 3.39% to 5.12%. This is interpreted as a result of buyers with limited funding turning to lower-priced homes. Accordingly, the proportion of apartment transactions for units priced under KRW 900 million rose by 7.2 percentage points, from 47.1% to 54.3%.

Ham Youngjin, Head of the Real Estate Research Lab at Woori Bank, assessed, “Since the final version of the tax reform has yet to be finalized and there is still the possibility of additional base interest rate hikes, it will likely remain difficult for the gap between buyer and seller price expectations to narrow in the near term.”

He added, “The future direction of Seoul’s apartment transaction market will likely depend on the timing of the finalization of the tax reform, whether the monetary authorities implement further rate hikes, and the degree of instability in the autumn housing rental market.”

This content was produced with the assistance of AI translation services.