Seoul's 86-week apartment rally slows to a third of its late-August pace

Gangnam District's last six weekly readings were minus 0.11%, 0.41%, 0.35%, 0.36%, 0.42% and 0.56% ^[5], a combined fall of about 2.2% ^[1]. Over the same six weeks the citywide index rose 0.29%, 0.22%, 0.20%, 0.16%, 0.13% and 0.09%, a gain of about 1.1% ^[3][2]. The streak, now 86 weeks ^[1], counts any week above zero. This week's 0.09% ^[2] extends the record exactly as the 0.29% week in late August did ^[3].

Gangnam's decline has not deepened every week. It eased from 0.41% to 0.35% in the third of the six weeks, then widened three weeks running, to 0.36%, 0.42% and 0.56% ^[7].

The Seoul Economic Daily puts the slowdown down to credit. It reports that tighter lending rules and higher interest rates have raised buyers' funding burden ^[13]. Smaller loan limits weigh more in Gangnam, where absolute prices are high, and trading there has thinned while the price cuts have grown, the paper reports ^[13]. Outside Gangnam, the board said, deals at higher prices continued mainly at large complexes, flats near subway stations and small- and mid-sized units ^[12]. I think that pattern shows buyers moving down to price points where a capped loan still covers enough of the purchase to close. The report does not include loan or transaction-volume figures to test that.

Suppose the citywide gain keeps narrowing at its average since late August, 0.04 points a week ^[3]. Then the 0.09% reaches zero in a little over two weeks, and the record stops at 88 weeks ^[4]. The outer districts point to a slower end. Seodaemun slowed to 0.41% from 0.44% ^[10], and at that rate it stays positive for more than three months ^[5]. A city of rising outer districts and a falling Gangnam could keep the streak going for weeks at a few hundredths of a percent. A third path is that Gangnam steadies, as it did once already in the third week ^[7].

I'd expect the first path, or something close to it. The regional averages are slowing faster than the single districts: the northeast fell to 0.28% from 0.33%, the northwest to 0.18% from 0.23% and the southwest to 0.16% from 0.20% ^[11]. At those rates the northwest and southwest reach zero in about four weeks, and the northeast in under six ^[6]. The case against is that weekly changes do not narrow in straight lines, and Gangnam's own series broke from its trend once in six weeks ^[7]. The view is wrong if the outer regions hold near this week's pace while Gangnam's falls shrink. That would mean a correction limited to the most expensive districts, with the citywide streak intact ^[13].