More than 90 percent of real estate experts predicted a decline in housing prices this year, while 1 in 2 said the housing market could see a rebound next year, according to a KB Financial Group report released Sunday.
The report said transaction prices of houses nationwide fell 1.8 percent last year, a first in 10 years. Daegu showed the highest decline with 5.2 percent, followed by Daejeon with 4.4 percent and the greater Seoul area with 2.7 percent.
The number of transactions also plunged almost 50 percent last year. In the latter half, the monthly transaction volume was an average of 33,000 houses, compared to 82,000 houses in the 2017-2021 period.
The KB survey, which was conducted among property experts, private bankers and 500 real estate agencies, showed 92 percent of private bankers, 95 percent of property experts and 96 percent of real estate agents predicted that the housing market would fall this year.
In the greater Seoul area, 35 percent of real estate agents and 26 percent of academics predicted a more than 5 percent decline in housing prices.
KB’s own outlook was a 4.1 percent decline.
Almost half the experts surveyed said a rebound in housing prices could come in 2024.
They cited eased rules for mortgage loans, lower taxes and other financial support as the key policies that could help improve the market sentiment.
The report said the current period of price adjustments will continue for a while but dismissed the possibility of drastic declines in housing prices.
“Recent rate hikes and heavy loans are less likely to lead to a surge in quick sales,” the report said, citing Korea’s relatively lower loan-to-value rate at about 50 percent, compared to more than 70 percent of advanced countries during the 2008 financial crisis.
Since financial regulations were toughened in 2019, the nation’s average LTV was 38.8 percent as of the first quarter of 2022.
In the meantime, "jeonse" prices also declined 2.5 percent nationwide last year, while the greater Seoul area alone suffered a 4.0 percent fall.
Jeonse is a unique home rental system in Korea where a tenant pays a lump-sum deposit, instead of monthly rent, to a landlord. The deposit typically ranges between 60 to 80 percent of the unit's sale price and is fully refunded at the end of the contract period.