Only 1-2 in 10 Experts and Agents Say "Seoul Home Prices to Stabilize Next Year" [Year-End Real Estate Outlook]

Seoul Apartment Listings Pile Up
Market Takes a Temporary "Breather"
Among 36 Experts and Agents,
Only 16.7% Say "Prices May Stabilize Next Year"
Half Say "Stabilization Will Be Difficult Anytime Soon"
Rental Market Outlook Even Bleaker

With listings of apartments in Seoul piling up and lending restrictions tightening, the market has entered a temporary "breather." Yet half of real estate experts and licensed real estate agents expect it to remain difficult for Seoul home prices to stabilize in the near term. Some also predict that instability in the rental market, including both jeonse and monthly rentals, will persist alongside the sales market. Market sentiment was clearly at odds with the government’s expectation that prices would "stabilize as early as this year."

Apartment complex in Songpa-gu, Seoul. Photo by Kang Jinhyung.

In a survey on "Housing Market Outlook After Year-End" conducted by The Asia Business Daily on October 28 and 29 among 36 people, including real estate experts and frontline licensed real estate agents, respondents were asked, "When do you expect home prices in Seoul to stabilize?" Only 16.7% answered "next year." Given that just 5.6% said "this year," only two in 10 respondents shared the government’s view on when stabilization would occur. Last month, Minister of Land, Infrastructure and Transport Hong Jiseon said in response to a question about the housing market outlook at a comprehensive parliamentary audit of the Ministry of Land, Infrastructure and Transport by the National Assembly’s Land, Infrastructure and Transport Committee: "The rate of home price increases is currently slowing, and interest rates and mortgage rates are also expected to rise by year-end, so I think the housing market may stabilize."

However, many respondents expected instability to continue over the long term, for at least two years. Half said it would be "difficult for prices to stabilize," indicating that it was hard to name a specific timeframe. Another 16.7% said stabilization would not come until "after 2029."

The outlook for the rental market was even bleaker than for home sales. Asked when jeonse and monthly rental prices in Seoul would stabilize, 47.2% of respondents said "stabilization will be difficult." The next most common response, at 25%, was "stabilization after 2029." In other words, more than seven in 10 experts believe that instability in Seoul’s jeonse and monthly rental market will continue for at least the next two to three years, or that it will be difficult to resolve structurally. They expressed concern that jeonse listings are gradually disappearing as housing policy increasingly prioritizes owner-occupancy.

These survey results directly contradict the government’s recent indications that it expects the market to stabilize. Citing the prospect of further base rate hikes and financial institutions’ efforts to rein in household lending, the government has suggested that price increases could slow and the market enter a period of stability as early as the fourth quarter of this year or early next year. Lee Seonghun, president of Korea Land and Housing Corporation (LH), also said, "If housing supply ramps up in earnest over the next three years, home prices will plunge."

Respondents cited a "shortage of urban housing supply" as the reason they expect instability in Seoul’s real estate market to persist. They said a break in the housing supply pipeline is driving up home prices. A "supply cliff" is becoming increasingly evident, with the number of new apartments in Seoul set to fall sharply as soaring construction costs and redevelopment and reconstruction regulations stall urban renewal projects.

Some also said a vicious cycle is taking hold, with instability in jeonse and monthly rents propping up home prices. A real estate expert who took part in the survey said, "Because of jeonse fraud and cases in which deposits are not returned, tenants worry whether they will be able to safely recover their deposits at the time they want when their contracts end. This anxiety could lead to increased demand to buy homes, as people prefer ownership to jeonse." The expert added, "Owners who bought homes at high prices will have to bear the original purchase price and financing costs, including loan interest, when they sell in the future. Taking those existing financing costs into account, they will set high asking prices when selling, which could make home prices more resistant to downward pressure."

Meanwhile, the shift from jeonse to monthly rentals and other factors are increasing housing costs, leaving the anxiety of prospective buyers without homes unresolved. The expert advised, "Policy improvements are needed to strengthen the security of tenants’ deposit returns, ease the burden of buying a home for people without homes, and stabilize home prices at levels aligned with the incomes of actual homebuyers."

Market experts’ definition of "market stabilization" was also reflected in specific figures. Asked, "What does it mean for the housing market to be stable?" nearly 40% of respondents defined it as "moderate price increases at the rate of inflation," while 33% said "no change." Other responses included "a slump in transactions" and "a bubble bursting."

A real estate expert who took part in the survey stressed, "We need to ease the market rigidity caused by owner-occupancy requirements. We must change the approach of saying, 'We will stabilize and normalize the market by suppressing speculative demand through strong regulations.'"

Commenting on the survey results, Nam Hyeokwoo of Woori Bank’s Real Estate Research Institute said, "An important point to watch will be whether declines in the three Gangnam districts spread to other parts of Seoul, but asking prices in other areas are still falling only to a limited extent. However, if financial regulations next year and stock market volatility persist, I think there is a possibility that the downturn will continue."

On October 31, President Lee Jae-myung shared on his social media a news article reporting that frontline real estate agents in the Gangnam area expected home prices across Seoul to enter a downturn in the near future. He commented, "We are enduring this difficult stretch on the road to normalizing the asset market."

Kim Inman, head of the Kim Inman Real Estate Economic Research Institute, said, "The recent drop in Gangnam home prices is a temporary phenomenon that emerged as owners put properties on the market at discounted prices, judging that selling now would be advantageous because tax benefits are set to be reduced. When liquidity is excessively abundant, it is natural for money to flow into Seoul and Gangnam, where demand is concentrated, pushing up home prices. Slowing that trend through policy does not mean the underlying problem has been fundamentally resolved."

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