A real estate agency in Seoul displays apartment units for sale, “jeonse” (housing lease system) and rent, Nov. 18. Yonhap
Doubts on policies keep buyers, sellers away
By Ko Dong-hwan
Korea’s real estate market is entering an even more sluggish phase following President Yoon Suk Yeol’s sudden declaration of martial law and the National Assembly’s subsequent reversal of the decree.
Although the emergency status lasted just six hours, it fueled concerns about the domestic housing market among potential buyers and sellers, who have become increasingly skeptical about the stability of the government’s housing and real estate policies.
According to a real estate portal operated by the Seoul Metropolitan Government, the trading volume of apartments in the capital has shown signs of recovery in recent months. In October, trade volume reached 3,714 units, up nearly 600 from the previous month with 3,124. November also saw 2,026 confirmed purchases, with expectations of surpassing 3,000 once unregistered transactions are accounted for.
However, real estate experts remain cautious about this month’s trade activity, as the fallout from the martial law declaration has weakened market sentiment amid rising uncertainty surrounding the government’s mortgage and housing policies.
“What will happen to the president and whether the administration’s real estate policies will be affected by the outcome are the questions on everyone’s mind right now,” a realtor agency operator in Seoul said. “Who will want to come and see an apartment to buy at this point?”
The market’s trade volumes suffered a hit in August when the government enforced more stringent regulations on mortgage loans by raising the bar on the debt-service-ratio, in a bid to put a brake on the country’s soaring mortgage loans. Since then, the market has been looking for an encouraging sign, but the martial law declaration has dealt an additional blow to the real estate market, forcing investors to extend their wait-and-see approach.
Apartments fill the skyline in downtown Seoul, Nov. 26. Yonhap
Realtors said the longer the martial law fiasco continues, the more the country’s economic policies will remain influenced by it. In the long term, market demand will stay low and negatively impact real estate value.
“It’s evident that more people will stay put, not buying, while the market keeps shriveling,” another realtor agency operator in Seoul said. “But how fast this fiasco is wrapped up may present varying consequences. If done quickly, the impact will be weak. Otherwise, the blow will be severe.”
The Ministry of Land, Infrastructure and Transport, which oversees the country’s housing policies, had planned to hold a housing provision plan meeting on Wednesday with its subagencies, which are responsible for the related regulations. However, following the martial law declaration, the meeting, which was to determine policies for next year, was canceled.
Another factor influencing current real estate buyer behavior is the uncertainty surrounding the potential reconstruction of older apartment buildings. Since reconstruction is authorized by the government, those who invested in old properties hoping for reconstruction are expressing fears as to whether plans already authorized will change due to Yoon’s possible impeachment.
“If the president really gets impeached, the rebuilding projects the current administration had approved might lose momentum in the next administration,” a realtor agency operator in Seongnam, Gyeonggi Province, said. “Some have already shown concerns whether reconstruction projects they hope for will hit a wall.”
