By Lee Min-hyung
The sales volume of apartments in Seoul is expected to fall to another record low in August amid prolonged market doldrums sparked by the rapid pace of interest rate hikes and freezing consumer sentiment.
Seoul apartment transactions fall to record low amid monetary uncertainty
According to data from the Seoul Metropolitan Government, the figure came in at 643 in July, the lowest since the authority started compiling related data in 2006. Data for August will be released around the end of September, but another monthly low is expected, as only 540 transactions have been reported so far.
The housing market sentiment has gotten worse in recent months, as the U.S. Federal Reserve and the Bank of Korea reiterate their strong willingness to curb inflation by raising their key interest rates further until at least the end of this year.
But the sales volume of villas in the capital city has been surpassing that of apartments since the beginning of this year. In August, more than 1,800 villas were sold when compiling data available as of Monday. In Korea, a villa refers to a medium-size apartment building with a smaller number of units.
Data from the Korea Real Estate Board showed that the average Seoul apartment transaction price in July fell by 3.14 percent from a month earlier. This was the biggest decline in more than 13 years since December 2008 when the figure dropped by 5.84 percent.
One key factor behind the freezing sentiment is households’ ever-growing fears of rate hikes. Korea’s benchmark rate came in at merely 0.5 percent until July last year, but the figure has jumped to 2.5 percent in only about a year amid escalating inflationary woes. With stock and other asset markets undergoing major adjustments, the negative investor sentiment has recently shifted to the housing market.
Market insiders said few people are willing to buy apartments in Seoul on expectations that prices will fall further.
“Only a few people call to ask about market trends, and more people prefer renting homes on fears of additional rate hikes and freezing market sentiment,” a Seoul-based real estate agent said.
Source: Korea Times
