Seoul Apartment Transaction Volume Rises for 3 Consecutive Months: Causes of the Bottoming-Out Theory and 2H Forecast

With Seoul's apartment sales volume recording a continuous increase for three consecutive months, the 'bottoming-out theory'—the notion that housing prices have passed their longest slump and finally hit rock bottom—is rapidly spreading in the market. We analyze the core reasons why end-user buying sentiment is stirring despite prolonged high interest rates and economic recession fears.

3 Key Factors Driving Seoul's Apartment Transaction Volume

• Depletion of Distressed Sales & End of Wait-and-See Approach: As distressed properties accumulated since last year in major areas are absorbed, the perception that housing prices will not fall further is quickly taking root among end-users.
• Pre-reflection of 2H Rate Cut Expectations: Although the timeline for the US Federal Reserve's benchmark rate cut is delayed, market interest rates (such as mortgage rates) have already entered the 3% range at the lower end, relatively easing the burden of financing.
• Preemptive Buying Triggered by Supply Shortage Fears: A sharp decline in new housing permits and housing starts is fueling anxiety over a potential supply drought of new apartments in downtown Seoul in 2-3 years, prompting buyers to move up their purchasing timelines.

2H Real Estate Market: The Signal of a Rebound?

Experts caution against interpreting the current rebound in transaction volume as a full-scale bull market, characterizing it instead as the 'entry into an era of hyper-polarization by region.' While highly preferred core areas like the Gangnam districts and 'Ma-Yong-Seong' (Mapo, Yongsan, Seongdong) are intermittently seeing new record-high transactions threatening previous peaks, peripheral areas are still grappling with an accumulation of unsold inventory. In particular, the strict Stress DSR (Debt Service Ratio) implemented to manage household debt is restricting loan limits, so overleveraged 'all-in' investments should be strictly avoided.

FAQ: 3 Core Questions on the Bottoming-Out Theory

Q1. Is now a good time to buy an apartment in Seoul?

A. For actual end-users, if you can withstand the risk of delayed interest rate cuts within your own financing capacity (DSR), it is not a bad entry point. However, gap investments for speculative purposes should be approached very conservatively considering the lease-to-sale price ratio and loan regulations.

Q2. How is the alternative housing market, such as villas or officetels, performing?

A. As apartment jeonse (key-money deposit) prices rise, rental demand is shifting towards relatively cheaper multi-family housing. However, in the sales market, liquidity remains low due to the lingering effects of jeonse fraud, so thorough location analysis must precede any decision.

Q3. Will housing prices fall again if the benchmark interest rate remains frozen?

A. A freeze in the benchmark interest rate itself is unlikely to trigger a sharp drop in housing prices; rather, it will likely act as a factor maintaining the current flat trend. More importantly, the decrease in the supply of new housing is expected to act as a strong support line defending prices.