Despite the rebound in apartment prices, why is there an increasing supply of listings?

While the Seoul apartment market continues to rebound, there's a paradoxical trend of an increasing supply of listings. As prices rise even after a rapid sell-off, there's a growing sense of caution among buyers, potentially causing a slowdown in demand. This year, overall home prices have been showing a downward trend, and the high prices have contributed to a strong sense of hesitation among potential buyers.

 

In conclusion, the Seoul real estate market remains uncertain due to the rebound in apartment prices and the increasing supply of listings.

 

 

As of August 24, 2023, Seoul apartment prices have been on the rise for 14 consecutive weeks since May 22, with the most significant acceleration in areas such as Songpa, Seocho, Gangnam, Yangcheon, Seongdong, and Gangdong, primarily due to urban development projects. Particularly, Songpa, which was the first to rebound in Seoul, has seen a 3.36% increase, Seocho 1.52%, and Gangnam 1.75%.

 

 

 

While Gangnam experienced a significant decline in the past, it has recently shown signs of recovery due to increased buying interest. However, despite the continuous uptrend in apartment prices, the supply of listings keeps growing. According to real estate big data company Asil, the supply of Seoul apartment listings increased by 7.8% from 64,571 units from June 1 to June 24 to 69,655 units. The so-called "urgent sale" listings are no longer depleting. Moreover, listings have increased by 36.6% since January 1 of this year. This surge in listings is not limited to Seoul but is a nationwide phenomenon, with it being the third-largest increase in listings across the country.

 

 

 

By region, Jongno-gu saw the most significant increase in listings at 15.5%, followed by Seocho-gu at 14.50%, Gwanak-gu at 12.6%, Gangdong-gu at 10.60%, Seongdong-gu at 10.40%, Songpa-gu at 9.90%, and Gangnam-gu at 8.20%.

 

As urgent listings become scarce and prices continue to rise, the price gap between sellers and buyers is widening, leading to a continual increase in listings. Consequently, the volume of apartment transactions in Seoul is decreasing. After recording 3,851 transactions in June, it decreased to 3,514 transactions in July. This decrease is significant considering that real estate transactions must be completed within 30 days of registration. However, experts still believe it is too early to predict a shift to a bull market, even though apartment prices are rebounding but listings are increasing.

 

 

 

Yoon Ji-hae, a researcher at R114, said, "The number of properties in the capital region has been maintained at around 200,000 units, the highest level ever recorded," and "with prices rising and buyers remaining cautious, transaction volumes have been sluggish since July." Moreover, she added, "Given that the supply level has remained stagnant for a year, it can be assumed that most of the properties that will enter the market are already available," and "there is also room for a trend reversal after a certain amount of inventory depletion next year when the supply diminishes."

 

Kim Hyo-seon, a senior researcher at NH Nonghyup Bank's real estate department, explained, "Homeowners who experienced a trading slump last year are raising prices this time but are not leading to transactions." She further stated, "Perception of high interest rates and the exhaustion of special-purpose home loans are contributing factors, and this could lead to a decline in demand for high-priced apartments."

 

 

 

In conclusion, the Seoul real estate market remains uncertain due to the rebound in apartment prices and the increasing supply of listings. The widening gap between buyers and sellers has led to reduced transaction volumes, making it a critical time to closely monitor the market's developments.