Seoul Mid-Range Apartment Prices Soar... Ordinary Citizens Face Difficulties in Buying Homes

Strengthened Regulations on High-End Houses in Gangnam... Funds Moving to Below 900 Million Won
Shillim Prugio, Previously in the 800 Million Range, Now Mid-900 Million Range in Two Months

(Photo by Yonhap News)

[Asia Economy Reporter Moon Jiwon] The real estate market, which had frozen due to the impact of the novel coronavirus infection (COVID-19), is gradually showing signs of recovery. After weeks of decline, apartment prices in Seoul are showing signs of rebound, and buying sentiment for apartments in the metropolitan area is also reviving.

Experts particularly expect that the prices of mid-to-low-priced apartment complexes under 900 million KRW will rise significantly, potentially driving up housing prices in Seoul.

According to the Korea Real Estate Board on the 6th, as of the 1st, apartment prices in Seoul shifted from a nine-week decline to stabilization. This is analyzed to be influenced by the depletion of urgent sales in the Gangnam area aimed at tax savings after the holding tax imposition date of 'June 1st,' and the continued rise in prices of mid-to-low-priced complexes under 900 million KRW.

The apartment sales supply-demand index for the metropolitan area by the Korea Real Estate Board also recorded 100.2, surpassing 100 for the first time in six weeks since the third week of April. The sales supply-demand index, calculated through surveys of brokerage offices by the Korea Real Estate Board, indicates that the closer the value is to 0, the more supply there is (buyer’s market), and the closer it is to 200, the higher the demand.

Exceeding 100 means that the number of people wanting to buy apartments has increased compared to those wanting to sell.

In the case of Seoul apartments, the sales supply-demand index recorded 97.0 but has shown recovery for three consecutive weeks recently. According to a survey by Real Estate 114, Seoul apartment prices rose by 0.03% this week, increasing from 0.01% last week. The price increase was larger mainly in areas with concentrated mid-to-low-priced complexes such as Guro-gu (0.11%), Seodaemun-gu (0.08%), Gangdong-gu (0.07%), and Nowon-gu (0.06%).

In reality, with the government significantly strengthening regulations on high-priced housing in the Gangnam area, the market liquidity is flowing into apartments under 900 million KRW, where regulations are relatively weaker, continuing the 'balloon effect.'

For example, a 138.64㎡ (exclusive area) unit in Sillim Prugio, Gwanak-gu, Seoul, was traded in the high 800 million KRW range until March but was actually sold for 965 million KRW on the 27th of last month, jumping above 900 million KRW.

A 125.021㎡ unit in Hwagok Prugio, Gangseo-gu, was traded for 870 million KRW in January but has seen actual transaction prices rise to 925 million KRW in March and 930 million KRW in April. Compared to December last year, this is an increase of about 100 million KRW.

Along with this, prices of apartments under 600 million KRW, which face weaker loan regulations, are also rising. For instance, an 84.98㎡ unit in Bukhansan Kolon Haneulchae, Dobong-gu, traded in the 550 million KRW range last year, has risen to the low 600 million KRW range this year.

Because of this, concerns are emerging that the number of apartments affordable for ordinary citizens in Seoul will significantly decrease. It may become even more difficult for newlyweds and young workers to own homes.

Lim Byungcheol, Senior Researcher of the Real Estate 114 Research Team, explained, "The upward trend will continue mainly in areas on the outskirts of Seoul and in the metropolitan area where prices have risen less." Ahn Myungsook, Director of the Real Estate Investment Support Center at Woori Bank, analyzed, "Prices in the Gangnam area are unlikely to rise easily, but funds are expected to flow to areas with weaker regulations such as Nowon, Dobong, and Gangbuk districts, or to provinces. The market will be distinctly divided based on the 600 million KRW threshold."

This content was produced with the assistance of AI translation services.