[Editorial News Analysis] Apartment Price Surveys Left to Human Judgment... Filtering Out Subjectivity Is Key to Earning Trust
- Input
- 2025-11-26 18:42:12
- Updated
- 2025-11-26 18:42:12
However, this actual transaction price is not always directly reflected in the weekly apartment price statistics compiled by KREB. If the unit is not a sample home, it may be excluded from the survey altogether. Furthermore, if the transaction is deemed 'abnormal,' the price is adjusted before being incorporated into the statistics.
Actual transaction prices are generally considered more reliable than Asking Price, as they represent the true value of a property. Nevertheless, in KREB's price surveys, these actual transaction prices are often excluded or adjusted. Why is this the case? The controversy over the Weekly Housing Price Statistics stems from this very question.
KREB's weekly National Housing Price Trend Survey covers 33,500 sample apartments across 213 cities, counties, and districts nationwide. A total of 337 surveyors examine these samples over two days—Monday and Tuesday—before the data is analyzed and published on Thursday.
There are two main concerns here. First, with each surveyor responsible for about 100 apartments, it may be unrealistic to expect thorough monitoring of price fluctuations within such a short timeframe. Overload could hinder careful observation. The second concern involves conflicts of interest. If a surveyor or their relatives are connected to the apartments they oversee, can the investigation truly be objective?
Son Tae-rak, President of KREB, explains, "All surveyors are full-time employees of KREB and are trained to make professional judgments through education. In addition, their work is supported by extensive and diverse information. Most importantly, any surveyor with a conflict of interest would be excluded from fieldwork. The surveyor does not make decisions alone; the regional headquarters continuously checks the process."
KREB's field survey organization consists of surveyors, a Director General of Survey, Branch Managers, and Regional Headquarters Directors. The data passes through this approval chain to enhance accuracy, minimizing the impact of individual circumstances.
Nevertheless, since surveyors are human, concerns cannot be entirely dismissed. To foster trust in the objectivity of the process, verification is needed. Regularly rotating sample and target apartments to prevent any one surveyor from overseeing the same complex for an extended period would serve as a safeguard. Additionally, forming a panel of external experts to review outliers or sudden changes could further enhance the credibility of the survey.
■ Potential for Price Distortion through Adjusted Values
Last month, a mixed-use apartment complex in Jongno District, Seoul, was listed at a price about 400 million won above the prevailing market value. The Asking Price was so high that a transaction seemed unlikely. However, a real estate agent, Mr. K, commented, "If the price is reduced by just 200 million won from this Asking Price, it will appear as if the price has been significantly adjusted, making a deal possible. From that point, this price becomes the new benchmark for transactions."
The biggest issue with the Weekly Housing Price Statistics is the ample room for personal subjectivity to influence the data.
'The subjectivity of real estate agents' can skew the very foundation of price surveys. While surveyors are supposed to conduct on-site visits, they often collect necessary data for sample home price calculations by calling real estate agencies. This includes Asking Price levels, transaction cases, available listings, and price trends. The prices cited by agents are frequently the sellers' Asking Price. When agents relay inflated Asking Prices to surveyors, and actual transactions occur near these figures, the cycle repeats, with these prices becoming the new market standard.
'Surveyor subjectivity' also distorts the price estimation process. Even if there are transaction cases for sample or nearby apartments, surveyors do not always use those prices as-is. First, they assess whether the transaction is normal. If a price is unusually low and appears to be a family transfer, it is classified as abnormal and adjusted accordingly.
In the earlier example of the FSS Governor's D Apartment in Seocho District, Seoul, the property was listed for political reasons, and the transaction price differed significantly from the Asking Price but was similar to the previous actual transaction price. The surveyor might classify the D Apartment sale as abnormal. In such cases, the surveyor estimates a hypothetical transaction price based on what would be expected under normal circumstances. While KREB describes this as a process to filter out extreme transactions, the adjustment inevitably involves the surveyor's personal judgment.
If there are no transaction cases related to the sample apartment, the likelihood of subjectivity increases. The surveyor first determines whether the current real estate market favors sellers or buyers. Then, assuming a transaction occurs, they estimate the likely price. This two-step process—market assessment and price estimation—leads to a hypothetical price that is then reflected in the statistics.
Eun-Young Choi, Director of the Korea Center for City and Environment Research (KOCER), remarked, "This kind of price survey essentially has surveyors asking themselves, 'What would the price of that apartment be?' This is a method that doesn't exist anywhere else in the world."
■ Problems Remain Even with Actual Transaction Price-Based Statistics
Many real estate experts argue that price statistics should be restructured to focus on actual transaction prices. The rationale is that Asking Price-based information is susceptible to subjectivity, which can distort the statistics.
However, statistics centered on actual transaction prices are not a perfect solution. A case study by KOCER on Eunma Town Apartments in Gangnam District, Seoul, demonstrates that even though actual transaction prices are crucial data, they cannot fully replace existing statistics.
Eunma Town Apartments is a massive complex with 4,424 units. KREB assigns greater statistical weight to larger complexes when compiling regional statistics. Thus, price fluctuations in a complex of this size can significantly impact not only the local area but also the overall Seoul market.
Yet, in 2022, there were 26 weeks during which no transactions occurred in Eunma Town Apartments. For more than half the year, there were zero sales. Despite this, the complex's price statistics existed year-round. Hypothetical prices, reflecting Asking Price and market conditions, were incorporated into the statistics. Buyers and sellers relied on these figures, even though no transactions had taken place.
That's not all. Over the five years from 2018, only about 12% of units in Eunma Town Apartments changed hands. In the remaining 88%, not a single transaction occurred. This means a small number of transactions could disproportionately represent the entire complex.
Chang-Moo Lee, a professor at Hanyang University, and Director Choi have suggested releasing actual transaction price statistics with a one- to three-month lag. The idea is to wait until enough transaction data accumulates to improve accuracy. However, if transaction gaps persist, the market could be left in the dark for extended periods.
■ Independent Indices Separating Asking Price and Actual Transaction Price
South Korea is the only country in the world to publish weekly housing price statistics. Unlike other countries, where single-family homes dominate, apartments—relatively standardized housing—are the norm in Korea. This uniformity allows for the compilation of weekly price statistics. For this reason, KREB has been publishing official housing price statistics since 2013, taking over the National Housing Price Trend Survey from the private sector.
In response to the ruling party's proposal to abolish the weekly trend survey, MOLIT has stated, "We are reviewing various alternatives," indicating a lukewarm stance. In the past, when statistical controversies arose, the number of samples was increased and the survey method was partially revised. This time as well, only minor adjustments may be made.
Some real estate experts acknowledge the shortcomings of the current survey but also point out the side effects of a complete shift to actual transaction price-based statistics. They argue that 'greater volatility in actual transaction prices can distort prices,' 'there is up to a 30-day delay in reporting actual transaction prices, reducing timeliness,' and 'it is difficult to filter out abnormal prices that deviate from the market.' As a result, there is a tendency to maintain the current framework with only minor tweaks.
An approach that treats everything as problematic is tantamount to doing nothing. The 'market price' that real estate experts hold as sacrosanct is not an objective market-determined price. It is not an exaggeration to call it a 'massaged price' shaped by the subjectivity of sellers, real estate agents, and surveyors. Statistics that mix Asking Price, actual transaction price, and surveyor estimates cannot earn the market's trust. Such statistics, when sensationalized by the media, have contributed to market confusion.
Ultimately, the most important thing is to enhance transparency by disclosing all types of prices as they are. Kim Yongchang, a professor of geography at Seoul National University (SNU), suggested in his report 'Issues of Data Consistency, Political Influence, and Information Overload in Housing Statistics' that separate indices be created based solely on Asking Price and actual transaction price. By analyzing the lag and relationship between these indices, the market situation can be better understood and communicated to consumers. While such indices cannot completely overcome the inherent limitations of Asking Price and actual transaction price, presenting raw, unprocessed price data alone would provide sufficient information for buyers and sellers.
