It has long been a rule of the real estate market that when transactions decline, prices fall, and when supply increases, housing prices drop. However, Seoul's recent housing market is directly defying this economic formula. Despite a contraction in transaction volume, record-high prices are emerging; even as more listings enter the market, prices continue to rise—an anomalous phenomenon. Furthermore, the tight rental market is acting as pressure that pushes up sales prices. The conventional wisdom that once dominated the market is now showing cracks simultaneously across multiple fronts. What exactly is happening in today's housing market?
According to Seoul Real Estate Information Plaza, apartment transaction volume in Seoul has been on a downward trend since peaking at 8,977 units in May. Following 5,300 units in June and 5,843 units in July, August's transaction volume—expected to be finalized by the end of this month—is projected to remain significantly below 5,000 units. The monthly average during this period fails to reach the historical monthly average of 5,736 units recorded from January 2006 through July of this year.
However, prices are instead surging. According to data from the Korea Real Estate Board, Seoul apartment price increases were steeper in June (1.03%), July (1.09%), and August (0.97%) compared to May (0.9%). The upward trend shows no sign of slowing even as September begins. The fact that transaction volumes are low indicates that the current market situation is far removed from past panic buying. The conventional wisdom that prices rise only when markets are bustling and transactions explode no longer holds true in today's market. Recently, while Gangnam areas have slowed down, a trend has emerged where transactions are increasing primarily in non-Gangnam regions. This creates an illusion known as "transaction mirage," where increased activity in specific areas appears to drive the entire market upward, misleading observers about the actual market flow. This explains why a contraction in transactions does not immediately lead to price stagnation or decline.
The same applies to supply. Since the reintroduction of the progressive capital gains tax for multi-homeowners in adjustment target areas like Seoul, listings have shown only a gradual increase. The feared "supply cliff" has not materialized. According to real estate information company ARISE, as of the 19th, the number of Seoul apartment listings stood at 72,081 units—a 5.2% increase from 68,495 units on May 9, just before the tax hike took effect. This is a point where one might easily fall into the simplistic reasoning that increased supply should naturally curb price increases.
However, what matters here is not the "total volume" of listings but "where they are accumulating." The recently increased listings are concentrated in high-end areas such as Gangnam and Yongsan, where tax pressures have intensified. These blue-chip regions are seeing transactions slow down, causing listings to pile up. Conversely, in mid-to-low-priced apartments in non-Gangnam areas, transaction volumes are rising while listings are actually decreasing. In other words, the current housing market is being driven upward by price increases in mid-to-low-priced apartments, lifting overall sales prices. This is the hidden reality behind the statistical illusion of increasing total supply.
There is a common belief that rental prices must exceed 60% of sales prices to push up sales values. As of August, Seoul's apartment rental-to-sales price ratio stood at 50.4% (KB Real Estate), falling short of this threshold. Numerically, it appears there is no room for rental prices to stimulate sales. However, reports from the field indicate that many young people, feeling anxious due to a lack of rental listings, are increasingly shifting toward purchasing homes, particularly in non-Gangnam areas. This represents a new phenomenon where "rental shortages" are stimulating sales prices. It highlights the fact that without housing stability through both rentals and leases, market stability centered on sales is difficult to achieve.
Ultimately, today's Seoul housing market is not a single, unified market. It is a fragmented market where price ranges, regions, and sales versus rental transactions move at different speeds and follow distinct logics. The rise in Seoul apartment prices reveals that while elderly homeowners are driven by "tax phobia," young people's housing insecurity is simultaneously growing. What has surfaced above the waterline is the market's fragmentation and the psychological asymmetry among participants, both obscured behind the statistical illusion of averages. However, a market not supported by transaction volume cannot be considered robust. It must be remembered that it can easily be shaken by even minor shocks.
in OPINION
