One year after the Oct. 15 package tightened mortgage lending, Seoul's apartment sales market has been redrawn along the loan ceilings the government set, data showed. Buying interest in apartments priced above 1.5 billion won ($1.1 million), where borrowing is capped at 200 million to 400 million won, has weakened sharply. Demand has instead shifted toward homes priced at 900 million won or less, where buyers can tap low-rate policy loans such as the Didimdol mortgage or the first-time buyer program.
According to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system on the 15th, a total of 62,181 apartments changed hands in the 12 months after the Oct. 15 measures, which capped loans at different levels depending on home prices. That is down about 15%, or 11,145 deals, from 73,326 in the preceding 12 months, a clear sign of a contraction in transactions.
Volumes diverged sharply by price band. Trading grew more active in the brackets eligible for low-rate loans. Deals involving apartments priced at 900 million won or less — the ceiling for policy loans including the first-time buyer and newborn-family programs — totaled 29,802 in the year before the Oct. 15 rules and rose slightly to 29,364 afterward. Their share of all deals jumped 6.6 percentage points to 47.2% from 40.6%. The increase was most pronounced for apartments priced at 600 million won or less, the Didimdol mortgage ceiling. Even as overall transactions fell by more than 10,000, deals in that bracket rose to 13,106 from 12,560, and their share climbed 4 percentage points to 21.1% from 17.1%, driving the overall gain in sub-900 million won transactions.
The market for apartments above 1.5 billion won, by contrast, cooled rapidly after the lending curbs. Deals in the 1.5 billion to 2.5 billion won range totaled 13,384 in the year before the rules but fell about 26.5% to 9,826 in the year after. Their share of all transactions narrowed 2.5 percentage points to 15.8% from 18.3%. Transactions of apartments above 2.5 billion won also dropped 21.7% to 4,605 from 5,886, with their share slipping 0.6 percentage point to 7.4% from 8%.
The 900 million to 1.5 billion won bracket, where borrowing is allowed up to 600 million won but policy loan benefits are hard to obtain, also shrank — to 18,386 deals from 24,354, a decline of nearly 6,000. Before the lending curbs, that bracket was the most actively traded segment of the Seoul apartment market, accounting for 33% of all deals, but its share has since fallen to 29.6%, dropping below 30%.
Analysts say the Oct. 15 measures have proved effective in curbing overall credit growth, but that market fragmentation and polarization have deepened. "At a time when even dual-income couples find it hard to buy an apartment worth hundreds of millions of won without a loan, apartments above 1.5 billion won are now within reach mainly for high-salaried employees who can access in-house corporate loans," an industry official said. "For ordinary buyers looking for a home to live in and trying to escape Seoul's tight rental market, the options have narrowed to mid- and low-priced homes on the city's outskirts or apartments in Gyeonggi Province."