After the land transaction permission system that was designated for some areas in Gangnam, Seoul, was lifted, the statistics related to apartment prices in Seoul have all shifted toward an upward direction. Opinions are divided on whether this trend is temporary or a signal of a long-term rebound.
According to the Korea Real Estate Board, for the week of February 17, the weekly apartment sale prices in Seoul rose by 0.06%, widening the increase compared to the previous week (0.02%). The increase was notable in the three districts of Gangnam, with Songpa (0.36%), Gangnam (0.27%), and Seocho (0.18%) showing significant gains.
According to KB Real Estate, which provides private statistics, the apartment sale prices in Seoul rose by 0.08% as of the 17th compared to the previous week. The increase was significantly larger than the gain of 0.03% a week prior. The rising trends were particularly evident in Gangnam District (0.38%), which includes 'the Jamsil, Samsung-dong, Daechi-dong, and Cheongdam-dong' areas where the land transaction permission system was lifted, and in Songpa District (0.29%).
The psychological indicators of the real estate market have also improved significantly. According to the National Land Research Institute's January consumer sentiment survey on the real estate market, the consumer sentiment index for housing sales in Seoul was at 110.4, rebounding by 2.7 points (p) for the first time in six months compared to the previous month. The index for the outlook on housing sale prices in Seoul also rose for the first time in seven months. Although the land transaction permission system was lifted on the 12th of this month, Seoul Mayor Oh Se-hoon mentioned the possibility of lifting the system last month.
There are conflicting opinions in the market regarding whether the recent increase is a temporary spike due to the lifting of regulations or the beginning of a long-term upward trend centered around Seoul. Those claiming it's a temporary rise argue that investment demand shifted to the Jamsil, Samsung-dong, Daechi-dong, and Cheongdam-dong areas, where gap investment was previously impossible, which only caused a short-term rebound, and that the rate of increase will soon diminish.
Ham Young-jin, head of the real estate research lab at Woori Bank, noted, 'The overall price increase in Seoul should be considered in light of the spring moving season rental price hikes and the alleviation of political uncertainty, and it may not happen until the first half of this year.' He added that the forecast for the economic growth rate this year remains in the 1% range, indicating low growth should also be taken into account.
On the other hand, those who advocate for a long-term upward trend argue that predictions of a rebound in housing prices in the second half of this year were made before discussions of lifting the land transaction permission system even began. Considering the long-term supply shortage and rising construction costs expected over the next 2 to 3 years, there is a high possibility that the overall upward trend will continue.
Ko Joon-seok, a professor at Yonsei University, stated, 'The base interest rate has also been lowered this month, and there have been calls from financial authorities to lower housing mortgage rates.' He added, 'Considering the lifting of the land transaction permission system, interest rate reductions, and rising construction costs, we should view this as the beginning stage of price increases in housing.'