Seoul's housing market sees biggest monthly price drop in 13 years
Advertisements for apartments up for sale or rent are posted at real estate agency in Seoul, Oct. 12. Yonhap
By Lee Min-hyung
The housing market in Seoul suffered the biggest monthly price decline in September ― since the 2009 global financial crisis ― amid dampened market sentiment triggered by rapid interest rate hikes, data showed Tuesday.
According to the Korea Real Estate Board, Seoul's average housing price fell by 0.49 percent last month compared to August. This is the largest fall seen in more than 13 years. The previous record was a 0.55 percent drop in January 2009.
“A consecutive set of interest rate hikes froze market sentiment, so only the few houses that were put up for sale at prices lower than those of previously transacted ones, have been sold. That led to the overall price fall in the market,” an official from the board said.
The nation's housing market has entered a period of decline starting in the second quarter of this year as jitters escalated at an alarming pace due to consecutive interest rate hikes. The Bank of Korea has increased its key rate to 3 percent from a low of 0.5 percent 15 months ago. The move was inevitable amid growing inflationary pressure and the U.S. Federal Reserve's increasingly hawkish monetary stance.
The average price of apartments nationwide also fell 1.88 percent in August. The cumulative decline between January and August came in at 5.16 percent. This is the steepest fall seen since 2006 when the board started compiling related data. This fall is way sharper than the earlier record of 1.71 percent in 2010.
Market insiders said the chilly market sentiment is unlikely to thaw and recover until rate hike fears subside.
“Few people are coming to view apartments in order to buy, and only some newlyweds are inquiring about rent prices,” a real estate agent in Seoul said. “The negative sentiment will change for the better only after the central bank displays gestures, which hint at a possible rate cut sometime next year.”