In core areas such as Seoul's Gangnam, buyers and sellers are split over apartment prices. While buyers think there is room for further price cuts, sellers, except for some urgent sales, are holding out, saying they "won't lower prices any further." As the gap widens between the prices buyers and sellers want, closing a transaction is becoming harder.
According to KB Real Estate on Apr. 6, the March outlook index for apartment sale prices in Seoul fell 10.0 points to 100.8. As expectations for rising home prices weakened for the second straight month, the index moved closer to the baseline of 100. When the outlook index exceeds 100, it indicates expectations that home prices will rise in two to three months; when it is below the baseline, a decline is expected to be more likely. The index is derived from a survey of more than 6,000 licensed real estate brokerages.
With bullish and bearish views on home prices evenly matched, Seoul's apartment market is mixed. In particular, a fierce game of wait-and-see is playing out between buyers and sellers in the Han River belt, including the three Gangnam districts (Gangnam, Seocho, Songpa), as well as Mapo, Yongsan, Seongdong, Dongdaemun and Gangdong, where many listings from multi-home owners are coming to market.
A person in their 40s surnamed A, who is planning to move to Mapo District, said, "I thought prices would fall a bit more and asked the landlord for a discount, but the price adjustment was not as big as I expected, so I am thinking a bit more about buying." A person surnamed B, who listed an apartment in Dongdaemun District, said, "I put the home on the market considering the most recent transaction price, and several groups came to look. No one has said they will buy yet, but the price seems appropriate, so people keep coming to see it, and I have no intention of lowering the price."
Brokerages say more cases are emerging where buyers come to view homes but fail to finalize a transaction because they cannot agree with sellers on the sale price. Buyers try to push for further cuts, but sellers say prices have already been sufficiently adjusted, and the two sides cannot narrow the gap. The head of a licensed real estate office in Mapo District said, "There are quite a few cases where buyers who came to see a home leave without deciding because prices could fall further," adding, "In the past, people would sign a contract without even looking, but the mood has changed."
As this wait-and-see stance persists, Seoul apartment transaction volume is also falling. According to the actual transaction price system of the Ministry of Land, Infrastructure and Transport, Seoul apartment transactions in March totaled 3,444, down nearly 40% from January (5,851) and February (5,505).
Sale prices are also mixed within Seoul, with some areas rising and others adjusting. According to KB Real Estate, in the fifth week of March (as of Mar. 30), Gangnam District (-0.09%) saw home prices decline for the fifth straight week, while Dongdaemun (0.65%), Gangdong (0.57%), Gangseo (0.53%), Yeongdeungpo (0.47%) and Seongdong (0.41%) rose. KB Real Estate assessed, "In Gangnam, transactions are centered on urgent sales, but as buyers take a wait-and-see stance, transactions are difficult except for urgent listings."
Still, it is uncertain whether this trend will persist for long. Nam Hyuk-woo of the Woori Bank Real Estate Research Institute said, "This tug-of-war between homeowners and buyers is mainly occurring in Gangnam and the Han River belt, where prices had previously adjusted," adding, "Recently, some end users who had been waiting for urgent sales are seeing that prices are no longer falling, so there has been a shift toward buying, and the buyer's advantage is gradually easing."