'Nodogang' House Prices Also Stagnate?..."Mid-Low Prices Struggle to Rise Alone"

Price Increase in Nowon, Dobong, and Gangbuk Districts Slows Down
Mid-Low Priced Complexes Under 900 Million Won... Rising Due to Balloon Effect
Experts Say "Balloon Effect Usually Doesn't Last Long"
Possibility of Seoul Turning Weak Due to Additional Government Regulations

(Photo by Yonhap News)

[Asia Economy Reporter Moon Jiwon] Since the announcement of the December 16 real estate measures last year, the apartment price surge in Seoul's Nowon, Dobong, and Gangbuk districts (commonly known as Nodo-gang) driven by the 'balloon effect' has shown signs of slowing down. With the Gangnam area, which leads Seoul's housing market, freezing and the government announcing plans for even stronger additional regulations, experts analyze that the balloon effect is unlikely to last long. Some experts predict that from next month, housing prices in certain parts of Seoul may turn bearish.

According to the Korea Real Estate Board on the 17th, as of the 13th, apartment prices in Gangbuk-gu rose by 0.04% compared to the previous week, which is about half of the previous week's increase of 0.09%. Apartment prices in Nowon-gu and Dobong-gu also rose by 0.04% during the same period, down from 0.07% the previous week. The growth rate in these three northeastern districts is the lowest since December 16 last year.

While it is difficult to conclude solely from the statistics that the upward trend in Nodo-gang has been broken, experts consider this a predictable development. Since the December 16 measures targeted high-priced homes exceeding 900 million KRW, the price surge was centered on mid- to low-priced apartments in non-regulated areas, but ultimately, the overall market sentiment cannot be defied.

Park Wongap, Senior Real Estate Specialist at KB Kookmin Bank, said, "The balloon effect is originally easy to burst with just a small stimulus, so it is hard for it to last long. With apartment prices in Gangnam stalling, mid- to low-priced apartments cannot continue to rise alone."

President Moon Jae-in’s mention of the possibility of additional regulations to block the balloon effect during his New Year's press conference on the 14th is also expected to impact the market. Experts anticipate that the government may lower the threshold for high-priced homes from 900 million KRW to around 600 to 800 million KRW or further tighten loan regulations such as Loan-to-Value (LTV) and Debt-to-Income (DTI) ratios.

Park predicted, "If the current atmosphere continues, apartment prices, especially in Gangnam, could decline in the short term starting next month." Given that Seoul apartment price increases have slowed for four consecutive weeks according to the Real Estate Board statistics, it is highly likely that the trend will shift toward slight decline or weakness.

However, there is also analysis that although urgent sale properties are appearing in Gangnam's redevelopment complexes, the cautious stance may continue for another month or two unless more price-reduced listings flood the market.

Kwon Il, Research Team Leader at Real Estate Info, said, "When measures are introduced, the market inevitably contracts temporarily, but over time, prices can rise again centered on where funds flow."

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