Is the Outer Seoul Apartment Market Flattening? 4 Out of 10 Deals Surpass Moon Administration's Price Peaks

38.2% of Transactions in Seoul's 10 Outer Districts Surpassed Previous Peaks in Q3
2020-2022 Price Records Broken
70% of Deals in Gangseo and Seongbuk Set New Highs
Transaction Volume Halved as Demand Concentrates on Mid- to Low-Priced Apartments

In the third quarter of this year, 4 out of every 10 apartment sales contracts in the outer and mid- to low-priced key districts of Seoul surpassed the previous peaks set during the real estate boom from 2020 to 2022. In the second quarter, the figure was 3 out of 10, but the proportion is increasing rapidly. As the supply of rental properties continues to shrink and end-user demand rises, transactions exceeding the highs set four years ago are expected to increase even further.

In the Third Quarter, 70% of Apartment Transactions in Gangseo and Seongbuk Surpassed Previous Price Peaks

According to analysis requested by The Asia Business Daily from the Zigbang Big Data Lab and released on September 23, among comparable high-point transactions in the 10 outer districts of Seoul, the proportion of deals exceeding the previous highs of 2020 to 2022 expanded from 20% in the first quarter of this year to 38.2% in the third quarter.

The ten districts surveyed are representative outer and mid- to low-priced concentration areas, with more than 90% of transactions in August involving apartments priced at KRW 1.5 billion or less. According to the Ministry of Land, Infrastructure and Transport’s public transaction data, all August transactions in Dobong, Gangbuk, and Geumcheon were below KRW 1.5 billion, while the corresponding figure for Nowon was 99.8%.

The data shows that roughly 7 out of every 10 transactions in Gangseo and Seongbuk districts broke previous highs in the third quarter. By district, the proportions of transactions exceeding past peaks were 69.6% in Gangseo, 67.9% in Seongbuk, and 49.5% in Gwanak, in descending order.

In Jungnang district, where 34% of third-quarter deals exceeded previous highs, an apartment on the first floor was sold for KRW 1.2 billion. Specifically, a first-floor unit in Sannae 5th Complex (Sinnae-dong) set an all-time high, surpassing the previous 2021 first-floor record of KRW 1.15 billion, achieved during the height of the real estate boom. Similarly, a 24-pyeong unit in Miseong Miryung Samho apartment complex (Wolgye-dong, Nowon) recently closed at KRW 1.2 billion, renewing the record price for its type.

In contrast with the upward trajectory of sales prices, total transaction volume is plummeting. In the third quarter, the 10 districts saw a combined 5,868 transactions, half of the 11,503 recorded in the second quarter. As listings become scarce, transaction volume has fallen, yet a wave of record-high prices continues in complexes with strong end-user demand, even as lending regulations persist and a transaction drought continues across the broader market.

Survival-Driven Buying Amid Jeonse Shortages and Lending Regulations

During the overheated real estate market in 2021, the price of Seoul apartments rose 8% according to Korea Real Estate Board, and 16.4% according to KB Real Estate. At that time, super-low interest rates due to the COVID-19 pandemic, a shortage of new apartment supply, and the introduction of the two major tenancy protection laws (the tenant renewal right and monthly rent ceiling) combined to create a severe rental shortage. This spurred a wave of highly-leveraged, speculative "all-in" purchases, driving market prices even higher.

View of an apartment complex in downtown Seoul from Namsan, Seoul. Photo by Yonhap News

However, the current surge in prices has a different character. Facing both high interest rates and stricter loan regulations, end-users and first-time buyers are rushing to purchase the last remaining outer district apartments available for KRW 1.5 billion or less amid an acute shortage of rental listings.

Ham Youngjin, head of the Real Estate Research Lab at Woori Bank, explained, "In 2021, the pandemic brought large-scale monetary easing and low interest policies, flooding the market with liquidity and driving up housing prices nationwide. Now, the number of new apartment completions has halved compared to then, leading to a scarcity of properties for sale."

Kim Eunsun, the director of Zigbang Big Data Lab, remarked, "As concerns over rental shortages and insufficient supply persist, more end-user buyers are switching from renting to buying. This trend has led to more purchases that exceed past peaks, particularly in the outer parts of Seoul where buyers' purchasing power is concentrated."

Kim Jaekyung, director at Toomee Real Estate Consulting, commented, "When the August 3 tax reform plan was announced, most experts predicted that controlling prices in Gangnam would create a spillover effect, leading to a preference for less 'prime' apartments. Coupled with the devastation in the rental market, the phenomenon of transactions surpassing four-year price highs is expected to intensify into the fourth quarter. There is no sign of the upward trend slowing down."

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