Lee: “Actual transaction prices in major areas have fallen to a surprising degree” — warning against the “real estate never loses” myth

[Financial News] President Lee Jae Myung said on the 3rd, in connection with the real estate market, “I think it may be important to make sure our people can directly access this accurate data.” He went on to call on the government to explain market data properly. His remarks are seen as stemming from his view that, as apartment listings in Seoul increase and transaction volumes decline, those who benefit from rising home prices are using only part of the statistics to steer the market outlook in one direction.
At a Cabinet meeting he chaired at Cheong Wa Dae that day, President Lee said, “There are various views about the outlook for the real estate market, particularly housing prices in the Seoul metropolitan area,” adding, “There are also those who are concerned about a collapse.”
President Lee said, “Apartment listings in Seoul are increasing rapidly right now, aren’t they? And transaction volumes are falling very rapidly,” adding, “Actual transaction prices in major areas are continuing to fall, and by a surprising degree.” He went on to say, “Of course, there are also areas where that isn’t the case.”
President Lee’s remarks are seen as referring to the downward price trend in the three Gangnam districts (Seocho, Gangnam and Songpa), among others. Weekly statistics showed diverging price trends for Seoul overall and the three Gangnam districts. According to the Korea Real Estate Board’s weekly apartment price trends for the fourth week of October, Seoul apartment sale prices rose by an average of 0.09% from the previous week, marking a 90th consecutive week of increases. By contrast, Gangnam District was down 0.38%, Seocho District 0.35% and Songpa District 0.22%. Seocho and Gangnam had declined for 12 consecutive weeks, while Songpa was down for an eighth straight week.
President Lee stressed, “It is clear that housing prices in South Korea are abnormally high, and that, for the sake of the country’s future, we must shed the stigma of being a republic of real estate speculation.” He added, “One thing the government can do is make sure objective data is properly explained.”
President Lee pointed out that those who benefit from rising housing prices tend to use only some of the data to push the market in one direction. He went on to say, “It is most desirable for real estate prices to remain stable; neither a sharp rise nor a sharp fall is desirable,” adding, “A major role of the government is to enable people to respond to market conditions based on accurate information.” This is seen as meaning that, while emphasizing both curbs on speculation and price stability, the government should take an active role in providing information so market participants can make decisions without being swayed by anxiety or expectations.
After the Cabinet meeting, President Lee again stressed the need to escape the republic of real estate speculation through X (formerly Twitter). On X, he wrote, “For the sake of the people and the country, the time has come to shatter the myth that real estate never loses, and it absolutely must be broken,” adding, “The government is already drawing up contingency plans, including bulk purchases for public rental housing if home prices fall sharply.”
Addressing concerns that a fall in home prices could lead to instability in financial markets, he stressed, “Because this administration has curbed growth in household debt and managed mortgage loans, financial-market instability resulting from fluctuations in home prices will also be limited.” He added that contingency plans were being prepared, including bulk purchases for public rental housing if housing prices fall sharply.
He identified a decline in housing permits as a cause of the recent rise in Seoul home prices. President Lee said, “A considerable part of the recent rise in Seoul home prices is due to the sharp drop in local governments’ housing permits that began in 2022,” and predicted, “As permits return to normal under this administration, the supply cliff will also ease from around 2028.” He added, “Our government will continue with ‘supply, no matter what.’” This is seen as an emphasis on sustaining supply policy, given the time lag between the recovery in permits and homes becoming available for occupancy.
President Lee said, “Some argue that the government will not be able to withstand a fall in home prices, but escaping the ruinous republic of real estate speculation is more important than the fate of the administration.”
[email protected] Choi Jong-geun Reporter