Korea’s housing market is showing signs of a fragile recovery fueled by increasing transactions, with more market participants purchasing apartments in the hope that the interest rate will not rise dramatically any further, data showed Tuesday.
According to data from the Korea Real Estate Board, the nation’s average apartment price fell by 0.43 percent during the week from Feb. 13, compared with a week earlier. Even if the price has yet to pick up momentum for a rebound, the fall has slightly slowed from the previous week when the figure reached 0.49 percent.
This was driven by an increase in transactions in the housing market. Data from Real Estate 114, a real estate research firm, showed that the number of apartment transactions in Seoul and its surrounding cities has been on a gradual rise for the past four months after falling to a historic low until the third quarter of 2022.
The figure ― compiled on Feb. 16 ― indicated that there were a total of 6,647 apartment transactions in Seoul and the metropolitan area in January, up 36 percent from the previous month.
Despite the growing mortgage burden, more people are opting to buy housing in hopes that the interest rate has already reached its highest level, according to data.
The Bank of Korea (BOK) steeply increased the key interest rate to 3.5 percent, but is widely forecast to freeze it during the upcoming rate-setting meeting on Feb. 23, on escalating fears of an economic slowdown.
Even if data indicates optimistic signs for a housing market rebound, economists say it is still premature to say that the market has entered a path for a stable recovery.
“As the central bank is forecast to maintain the high level of the benchmark rate throughout this year, chances appear slim for the housing market to achieve any remarkable rebound in 2023,” Kim Dae-jong, a professor of business administration at Sejong University, said.
Source: Korea Times