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Shocks from interest rate hikes hit home prices nationwide last year to fall the most since 2003

Last month, housing prices across the country fell by the most since the Korea Real Estate Agency calculated house price statistics in December 2003.

Last year's annual decline in apartment prices surpassed the crash during the global economic crisis and was the biggest drop since the 1998 foreign exchange crisis.

According to a survey by the Korea Real Estate Agency on the 16th, the price of houses (apartments, townhouses, and detached houses) nationwide in December last year fell by 1.98% compared to the previous month.

This is the biggest drop on a monthly basis since Korea Real Estate Agency calculated house price statistics in 2003.

House prices in Seoul and the Seoul metropolitan area also fell by 1.96 percent and 2.60 percent, respectively, last month, the biggest drop since the statistics were compiled.

In the aftermath of the steep rate hikes that followed last year, buying disappeared, dragging down trading prices as the historic trading cliff continued.

In particular, apartment prices in Seoul fell by 2.96% last month, 1 percentage point higher than the housing average.

Apartment prices nationwide and in the metropolitan area also fell by 2.91% and 3.66%, respectively, setting a new record for the largest decline in the past.

Experts expected that the decline would continue for a while, although the decline has slowed down somewhat this month after the government announced large-scale market soft-landing measures such as tax and financial deregulation since the end of last month and lifted all but Seoul's Gangnam 3 district and Yongsan district from the regulated area earlier this month.

As house prices weakened last year, the annual housing composite fell by 4.68 percent nationwide and 4.75 percent in Seoul.

Since statistics were calculated in 2003, Seoul in 2012 (-4.75%) It is the largest drop in a decade.

Apartment prices fell by 7.56 percent nationwide, 9.68 percent in the Seoul metropolitan area, and 7.70 percent in Seoul.

It was the biggest drop since the 2003 Real Estate Agency statistics were calculated, surpassing the previous recession in 2012 and the biggest drop since the 1998 foreign exchange crisis.

The largest drop in apartment prices in the country was in Sejong, which fell by 17.12% in one year. It was followed by Daegu, which fell 12.38%, the second largest drop. Both are the aftermath of oversupply.

In 2021, apartment prices jumped by 24.51% and 22.54%, respectively, and Incheon (-12.52%) and Gyeonggi (-10.13%), which ranked first and second, plummeted by more than 10% last year.

In comparison, single-family houses, which have a large proportion of land prices, increased by 1.61% nationwide and 2.07% in Seoul last year, contrasting with apartments. This is why land prices have been sustained due to the impact of various development projects.

However, the increase was less than half from the previous year (3.10% nationwide and 4.70% in Seoul).

Housing rental prices also weakened last year. In August 2020, the rental price, which had soared since the Lease 2 Act, such as the previous month's tax cap and the right to request for contract renewal, came into effect, has dropped significantly due to a decrease in demand due to interest rate hikes and rent conversion, and the side effects of tin can charter, and reversal of rents are spreading.

Housing rental prices fell by 5.56 percent nationwide last year, while Seoul fell by 6.55 percent. This is the biggest drop in 18 years since 2004 (-5.84% and -7.80%) respectively.

In particular, last year, apartment rental prices fell by 8.69% nationwide and 10.11% in Seoul, the largest decline since statistics were calculated in 2003.

As rental prices fell and monthly rents increased, housing rents fell by 0.28% nationwide and 0.27% in Seoul compared to the previous month.

Apartment rents fell 0.41 percent nationwide and 0.45 percent in Seoul last month. [YonhapNews]

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