The downturn in the real estate market continued in the first quarter of this year with the closure of real estate agencies in the second half of last year안전놀이터.
While the government’s deregulation of real estate is slowly warming up the market, there is still a chill in the air as transaction volumes have dropped significantly compared to the past. Brokerages are complaining that there are more closures than openings.
According to data from the Korea Association of Certified Brokers on March 23, the total number of closures and closures of authorized brokerages nationwide in the first quarter (January-March) was 3,977. This is more than 100 more than the number of open brokerages (3837). This is in contrast to the first quarter of last year, when the number of openings (4927) outnumbered closures (2824) by more than 2,000.
One of the reasons for the increase in brokerage closures is insufficient trading volume. The Korea Association of Certified Realtors said, “The real estate brokerage business is directly related to income through increased transaction volume,” adding, “Although news of rising property prices is trickling out of the market, the transaction volume is still far below that of the past few years.”
In fact, the total number of home sales transactions in the first quarter of this year totaled 119,885 (Korea Real Estate Agency), about 20,000 fewer than in the first quarter of last year (138,349).
As the spring moving season is coming to a close, the number of inquiries about transferring brokerage firms is also increasing. On the Korea Association of Certified Realtors website, there were 1,365 transfers posted on the brokerage office buying and selling community until the 21st of this month. Compared to March (818) and April (888), this is a sharp increase of about 500.
Market experts agree that the high number of agency closures should be viewed as a pessimistic sign that real estate transaction volumes are unlikely to increase or the market to revitalize anytime soon. This is because the number of openings and closures is a leading indicator of real estate market transaction volume as it reflects the sentiment of real estate agents.
Some brokers involved in chartering scam…industry ‘sighs’
Another reason for the increase in closures is the recent chartering scam.
In the midst of the prolonged real estate downturn, the revelation of some real estate agents’ involvement in charter fraud has led to a loss of confidence in the market and a deepening of sighs among active real estate agents.
Some may argue that the reputation of a few brokers who engaged in charter fraud has spread to the entire industry.
Recently, problems such as canned subletting and subletting scams have been brought to the surface due to failed multifamily owners who made a “gap investment” of buying multiple houses with subletting and then selling them to maximize market appreciation, and more than half of the cases of canned subletting and subletting scams were found to be brokered through real estate agents.
Most of the victims of charter fraud were young people in their 20s who lacked real estate experience. According to the Civil Infringement Crime Reporting Center, the crimes were mainly committed by inflating the prices of newly built villas, which are difficult to identify, to induce contracts and collect brokerage fees in the process.
Following the decline in apartment prices, the number of authorized brokerage firms closing their doors has been increasing as the phenomenon of shunning villas and offices has intensified.
In response, the Ministry of Land, Infrastructure, and Transport organized the ‘Real Estate Brokerage System Reform Task Force (TF)’ involving the private, public, and academic sectors on the 17th and held its first meeting.
The TF plans to diagnose problems such as illegal brokerage activities and prepare measures to reform and advance the overall real estate brokerage system. The task force will be expanded to include relevant experts depending on the issues to be discussed.
The main brokerage system reform plans include ▲ strengthening the safety of brokerage transactions ▲ enhancing the professionalism of authorized brokers ▲ and creating a convenient real estate transaction environment. It was decided to harmonize the details through further discussion.
The meeting examined major types of charter fraud, such as authorized brokers inducing ‘canned charter’ contracts (charters with a high ratio of charter price to sales price, resulting in a high risk of non-return of charter fees) and unqualified persons engaging in illegal brokerage activities, and collected opinions on future TF operation plans and discussion issues.
Translated with www.DeepL.com/Translator (free version)