Recent Surge in Apartment Transactions: Sign of Market Recovery or New Bubble?

Recent Surge in Apartment Transactions: Sign of Market Recovery or New Bubble?

1. Introduction

In the first half of 2024, the number of apartment transactions in Seoul has reached the highest level in three years, injecting vitality into the real estate market. However, it is still unclear whether this increase in transaction volume is a mere sign of market recovery or the beginning of a new bubble. In this article, we will analyze the current status and background of the recent surge in apartment transactions, and look at the market outlook by synthesizing expert opinions.

2. Status of Recent Surge in Apartment Transactions

2.1. Increasing Transaction Volume

According to the Real Estate Information System of the Ministry of Land, Infrastructure and Transport, the number of apartment transactions in Seoul in the first half of 2024 (January to June) reached 17,980, the highest level since the second half of 2021. This is an 8% increase from the second half of last year, and the increase in transaction volume has become more pronounced since March.

2.2. Changing Transaction Structure

A notable point along with the increasing transaction volume is the change in transaction structure. The transaction of high-priced apartments is increasing. In fact, the proportion of transactions of apartments worth 900 million to 1.5 billion won increased from 29.3% in the second half of last year to 32.1% in the first half of this year. On the other hand, the proportion of transactions of apartments worth less than 900 million won decreased to 49.3%.

3. Background of the Surge in Transaction Volume

3.1. Low-Interest Rate Environment

The recent drop in mortgage rates to the low 3% range has reduced the burden of purchasing a home. This is particularly attractive to those considering real estate investment.

3.2. Rising Jeonse Prices

The continued instability of the jeonse (key money) market is also a factor activating the apartment sales market. Rising jeonse prices have led many people to prefer buying rather than renting, and this is increasing the demand for apartment purchases.

3.3. Supply Shortage

The supply shortage problem has not yet been resolved despite the 'housing supply deregulation' policy implemented since 2022. The supply shortage is putting upward pressure on apartment prices, and this is inducing an early purchase.

4. Expert Opinions

4.1. Market Recovery Outlook

Some experts believe that the recent surge in apartment transactions is a sign of market recovery. They predict that apartment prices are also likely to rise if factors such as the low-interest rate environment, rising jeonse prices, and supply shortages continue.

4.2. Concerns about New Bubbles

However, other experts express concerns that the excessive increase in transaction volume could form a new bubble. In particular, they point out that caution is needed as the number of purchases for investment purposes is increasing.

5. Conclusion

There are two interpretations of the recent surge in apartment transactions: market recovery and the possibility of a new bubble. The future direction of the market is expected to be determined by various factors such as the low-interest rate environment, jeonse price fluctuations, and government policies. If you are considering buying a home, careful judgment and sufficient information gathering are required.