Apartment Prices Jump... Seoul's Top Villa Transaction District Faces 'Listing Drought' [Real Estate AtoZ]

Apartment Prices in Gangseo-gu Surge 9%, Four Times Last Year
Villa Jeonse Prices in Hwagok-dong Nearly Match Sales Prices
Supply Measures Lag Behind... Immediate Shortage of Affordable Homes

"It's still quiet, isn't it? There are no customers, and we don't even have any listings."

The owner of real estate agency A, located near Hwagok Station in Gangseo-gu, Seoul, gestured toward the empty office and said, "After the buying demand swept through in the first half of this year, it's been quiet even ahead of the autumn moving season." As buyers who gave up on purchasing apartments began searching for alternatives, the market with the most transactions in Seoul—row houses and multi-family homes (commonly known as villas)—is seeing listings dry up.

A village of villas in Hwagok-dong, Gangseo-gu, Seoul. Old villas and multi-family houses are densely packed along the steep alleys. Photo by Choi Seoyun

Concentration of buyers on villas as an alternative—Jeonse prices are catching up with sales prices

The background behind the shift to villas lies in the steep surge in apartment prices. According to the real estate industry on August 23, the Korea Real Estate Board's weekly apartment price survey for the third week of August (as of the 17th) showed the Gangseo-gu sales price index rising by 0.28% compared to the previous week. The pace of increase has grown for three consecutive weeks. The cumulative rise is 9.56%, more than four times the same period last year (2%). Jeonse prices also climbed 5.63%, whereas the rate was 2.04% during the same period last year.

As the entry barrier for apartments grew higher, both purchase and rental demand concentrated in the relatively affordable villa market in Hwagok-dong during the first half of this year. Hwagok-dong is an area where old red-brick villas and newly built multi-family homes line every alley, making it the most active trading neighborhood in Seoul. As of August 21, the number of villa sales transactions in Hwagok-dong this year reached 1,253, while jeonse and monthly rental contracts amounted to 3,686—the highest among all legal districts in Seoul. This translates to an average of 5.4 sales and 15.8 rental transactions per day.

With demand for jeonse focused on villas, jeonse prices have quickly caught up to sales prices. According to an analysis by The Asia Business Daily of the Ministry of Land, Infrastructure and Transport’s actual transaction disclosure system, the new median jeonse price for villas and multi-family homes under 40㎡ in Hwagok-dong between the start of this year and August 21 was 182 million won, up 7.1% from the same period last year (170 million won). Meanwhile, the median sales price for properties of the same size dropped 5.1% from 216.1 million won to 205 million won. The gap between sales and jeonse prices has narrowed by almost half, from 46.1 million won to 23 million won.

Typically, villa neighborhoods are considered a housing ladder, a place to save money before buying an apartment. The owner of real estate agency B in Hwagok-dong explained, "Office workers and newlyweds living in Hwagok-dong mostly see this neighborhood as a temporary stop," and added, "Many plan to live here on a rental basis and move to an apartment later." He continued, "While people may live in villas because they don't have enough money, they rarely seek to own one under their name—after all, they are difficult to resell later."

However, as jeonse listings have dried up and the gap between sales and jeonse prices has shrunk to just over 20 million won, more people are opting to purchase homes outright. The owner of real estate agency C in Hwagok-dong said, "With jeonse prices so high, many people now prefer to buy rather than rent. Even among the younger generation and newlyweds seeking jeonse in March and April of this year, many ended up purchasing homes. Most of those who wanted to buy already did so back then, and now there are no more listings available."

Indeed, villa sales transactions in Hwagok-dong peaked at 226 in March, then fell to 196 in April, 184 in May, 174 in June, and 151 in July—showing a decreasing trend. Over four months, the transactions dropped by 33%. Canceled contracts were excluded from this tally.

Impact of jeonse fraud leads to drop in new constructions and supply lag—Mid- and low-priced homes likely to remain strong

Compounding the issue, the supply of new villas has also dried up, worsening the shortage of available properties. The owner of real estate agency D in Hwagok-dong remarked, "It seems there haven’t been any new villa constructions around here for about five or six years. With material costs up and pre-sales becoming harder, no new properties are coming to market."

The decrease in supply accelerated after a series of jeonse fraud cases. These damaged confidence in the villa market, and the real estate project financing (PF) crunch further undermined profitability, effectively stopping new supply. The government has belatedly moved to restore supply, but homes available for immediate occupancy remain scarce.

In its housing rapid supply plan announced on August 13, the government cited sluggish construction starts since 2022 and delays in the recovery of private and general housing supply as drivers of rising home prices and rents. Regulatory easing on multi-family and multi-household housing construction, as well as expanded financial support for developers, have been promised, but it will take time for new homes to reach the market. Meanwhile, real users are unable to find suitable jeonse properties and are hesitant to buy villas outright.

Similar trends are observed in Sillim-dong, Gwanak-gu, which has the second most villa jeonse and rental transactions in Seoul. Not only rentals, but even affordable sales listings have vanished. The owner of a real estate agency in Sillim-dong said, "Even ahead of the autumn moving season, inquiries from office workers and young people looking for jeonse remain steady, but since there are so few jeonse listings, some are switching to half-jeonse or buying instead. Since all the cheap properties were taken in the first half, it’s not easy for rental demand to spill over into sales."

With supply shortages and the upward trend in jeonse and rental prices continuing, analysts predict that mid- and low-priced home prices in Seoul will remain resilient. Baek Sangyoung, a researcher at Daishin Securities, wrote in a recent report titled "Impact of Real Estate Tax Reform: Decrease in Rental Supply Offset by Increased Sales Supply" that "loan regulations remain strict, and supply—especially of apartments—will fall short through 2030. The mid- and low-priced housing market will continue to see strong rent increases and a high jeonse-to-sales price ratio, making a price downturn unlikely."

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