Gangnam Price Caps Drive Surge in Non-Gangnam Districts With Over 10% Increases...Widespread 'Ceiling-Matching' at 1.5 Billion Won [Real Estate AtoZ]

Seongbuk, Guro, Gangseo, and Seodaemun Districts See Over 10% Price Hikes
Jung, Gwanak, Nowon, Dongdaemun, and Yeongdeungpo Set to Join the "10% Club"
Record-High Prices Continue for Small and Mid-Sized Units
Buyers in Their 30s Now Account

As of the last week of August this year, four out of Seoul's 25 districts recorded cumulative apartment price growth rates surpassing 10%. Last year, during the same period, only Songpa District had broken the 10% mark. While the surge in home prices was previously concentrated in the affluent Gangnam area, this trend has quickly spread to the northeastern, northwestern, and southwestern regions of Seoul.

According to weekly apartment price trends recently announced by Korea Real Estate Board on the 31st, districts in Seoul with cumulative apartment price increases exceeding 10% this year are Seongbuk (12.44%), Guro (10.24%), Gangseo (10.10%), and Seodaemun (10.02%). The average price increase in these areas soared from 1.88% last year to 10.70% this year. Jung-gu, Gwanak-gu, Nowon-gu, Dongdaemun-gu, and Yeongdeungpo-gu also showed increases in the upper 9% range and are close to surpassing 10%. Meanwhile, the average increase in the three core Gangnam districts, home to the highest-priced properties, fell from 10.77% to 3.45%.

The proliferation of districts recording price increases above 10% is attributed to a shortage of listings and the effects of tighter lending regulations. In areas with a concentration of mid-to-low-priced apartment complexes, new record-high prices are continuously being set, especially near the 1.5 billion won threshold where the maximum possible mortgage amount applies. At Raemian 8th Complex in Gireum New Town, Seongbuk District, a 59㎡ unit reached a record 1.4 billion won (fifth floor) in June. Having remained below 1 billion won throughout last year, prices have climbed close to 1.5 billion won in just half a year. A larger 84㎡ unit in the same complex sold for 1.59 billion won (eighth floor) on July 29, up from a previous transaction at 1.23 billion won (eighth floor) at the end of last year. This represents a sharp rise of 360 million won in just seven months.

Sales prices in the southwestern outskirts are also trending upward. In Guro District, which ranks second by increase rate, an 84㎡ unit at Shindorim 4th e-Pyunhansesang was sold at a new high of 1.89 billion won (seventh floor) in June, up 70 million won in just seven months. In Gangseo District, which ranks third, a 59㎡ unit at Ujangsan I-Park e-Pyunhansesang recorded a new high of 1.455 billion won (sixteenth floor) on August 7, and an 84㎡ unit set a fresh record at 1.63 billion won (seventeenth floor) on August 8. In both cases, prices jumped by 50 million won in either a week or a month, respectively.

In Gwanak District, where price increases are nearing 10%, prices have mostly risen for small- and mid-sized units. A 59㎡ unit at e-Pyunhansesang Seoul National Univ. Station in Bongcheon-dong was sold for 1.45 billion won (seventh floor) on May 12. Previously, the price hovered around 1 billion won last year, but has approached 1.5 billion won this year. An 84㎡ unit in the same complex set a new record at 1.665 billion won (eleventh floor) in June. Last year, comparable units traded at 1.1 billion to 1.2 billion won in the first half of the year.

Brokers working on the ground comment that market sentiment these days is best described as a “target price alignment,” meaning that mortgage limits are essentially determining ceiling prices. In the Seoul metropolitan area, the maximum mortgage limit is 600 million won for homes priced up to 1.5 billion won, dropping to 400 million won for homes above that threshold. Apartment prices in the neighborhoods that have seen the biggest increases are clustered just below these caps.

A broker at a real estate office in Gireum-dong, Seongbuk District, said, “Previously, our main listings here were in the 1 billion to 1.2 billion won range. Now, since mortgage regulations are lighter up to 1.5 billion won, homeowners believe there is room to push prices up to that threshold.” The broker added, “Some raise their asking price because prices in the areas they want to move to have jumped so much.”

A broker in Sanggye-dong, Nowon District, said, “Owners of even first- and second-floor listings are asking 1.5 to 1.6 billion won, making the price per 113㎡ unit equal that of 149㎡ units. This strange phenomenon is happening because demand is focused only on unit types where loans are easier to secure.”

A panoramic view of apartment complexes in Seoul city from Namsan, Seoul. Photo by Dongjoo Yoon

A broker near e-Pyunhansesang Seoul National Univ. Station in Bongcheon-dong, Gwanak District, said, “Recently, most buyers, many of whom are young people born in the late 1980s, are maximizing their mortgages at the full 600 million won limit.” This broker continued, “After falling to the 900 million won range in 2023 following the 2021 peak, prices have shot up to the 1.6 billion won level, prompting younger buyers to rush into the market out of fear that prices will only rise further if they wait.”

Another broker in Gwanak District noted, “With landlords moving in and the scarcity of rental options, many tenants just bought a home by taking out a loan. We referred to this as ‘forced purchases’ among ourselves.” The broker added, “With convenient commuting options, including Line 2 subway access and a shuttle bus to Samsung Electronics, many people decided to buy a home at all costs—even if it meant maxing out their loans—rather than give up on these location benefits.”

Current market data confirms that thirty-somethings are leading the buying trend. According to Korea Real Estate Board’s transaction data by age, the share of Seoul apartment purchases by those in their 30s climbed from 37.7% in January this year to 40.7% in February, surpassing the 40% mark. By April, it peaked at 45.9% and has remained in the 40% range since. This age group is the most reliant on loans when securing capital for home purchases.

Experts point out that the combination of mortgages capped at 1.5 billion won and the concentration of real demand among buyers in their 30s is driving more volatile housing prices in the city’s outer regions.

Ham Youngjin, Head of Real Estate Research Lab at Woori Bank, commented, “While Gangnam and riverside neighborhoods soared last year, areas that lagged behind are now catching up. A shortage of rental listings and the conversion of jeonse (lump-sum deposit leases) to monthly rent are occurring simultaneously, intensifying FOMO (fear of missing out) demand among thirty-somethings in non-Gangnam areas.” He continued, “Even newly built home prices have gone up significantly, which is driving demand toward existing complexes under the 1.5 billion won mortgage cap, where loans are still relatively accessible.”

Changmoo Lee, Professor at Hanyang University, noted, “When upward price pressure is suppressed for high-end housing in Gangnam, that demand gets pushed to outer districts in a repeat of the so-called ‘balloon effect.’ This mirrors the rapid surges in Nowon, Dobong, and Gangbuk seen under former Presidents Roh Moo-hyun and Moon Jae-in. What's concerning is that a phenomenon typically seen at the end of an administration has erupted this early in the current government’s term, adding a considerable source of pressure.”

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