An international organization's statistics showed that Korea's real prices of dwellings fell 1.6%, extending a decline for more than three years. Real dwelling prices refer to home prices with inflation stripped out. A drop in real prices means inflation rose faster than home prices.
According to the Bank for International Settlements (BIS) and the Bank of Korea (BOK) on the 27th, Korea's real residential real estate prices in the third quarter of last year fell 1.6% from a year earlier. After switching from a 3.8% rise in the second quarter of 2022 to a 0.5% decline in the third quarter, prices continued to fall for 13 consecutive quarters through the third quarter of last year.
The third-quarter decline ranked 47th out of 56 countries included in the BIS statistics. Korea ranked 50th at -2.2% in the first quarter and 51st at -1.9% in the second quarter last year, before its ranking rose somewhat. However, it was lower than both the advanced economy average (0.3%) and the global average (-0.7%). Beginning with the statistics published in Jan., the BIS classifies Korea as an advanced economy.
By country, North Macedonia ranked first with a 19.8% rise in real prices of dwellings. Hungary (16.1%), Portugal (14.7%), Spain (9.8%), and Bulgaria (9.5%) followed. By contrast, China was last among 56 countries at -5.3%, and Canada (-5.1%), Finland (-3.5%), New Zealand (-3.5%), and Romania (-2.6%) also fell sharply.
In a report on the 19th, the BIS said, "In the third quarter of last year, global real prices of dwellings fell 0.7% year over year, similar to the previous quarter (-0.8%)," adding, "Even though nominal dwelling prices rose by about 2%, real prices fell."
The decline in Korea's real prices of dwellings appears to reflect inflation as well as a polarization in home prices between Seoul and non-capital regions. The Bank of Korea (BOK) said in its Financial Stability Report at the end of last year, "Since 2024, dwelling sale prices in the capital region have continued to rise, while non-capital regions have generally remained on a downward trend, leading to ongoing regional differentiation in the dwelling market."
In fact, over the course of last year, actual transaction prices for apartment sales in Seoul rose 13.5%, marking the highest annual increase since 2020, when home prices surged.