Seoul Apartment Prices Stabilize After 37 Weeks... Impact of Economic Downturn Spreads

Economic Downturn Triggered by COVID-19 Spread
Decline in Gangnam Area Buying Demand...Urgent Sales Transactions Down 10%
'Balloon Effect' with Increased Price Growth in Some Areas like Incheon

[Asia Economy Reporter Moon Jiwon] Due to the spread of the novel coronavirus infection (COVID-19) and the acceleration of domestic and international economic recession, Seoul apartment sale prices have shifted to a flat trend after 8 months.

According to the "2020 March 3rd Week Nationwide Weekly Apartment Price Trend Survey" released by the Korea Real Estate Board on the 19th, as of the 16th, Seoul apartment sale prices rose 0% compared to the previous week.

This is the first time in 37 weeks since the first week of July last year that Seoul apartment prices have shifted to a flat trend. Seoul had recently maintained a rise rate of 0.01~0.02%.

The Korea Real Estate Board explained, "Amid the spread of uncertainty due to the COVID-19 situation, concerns over economic recession, and strengthened loan regulations, the buying demand has decreased mainly in Gangnam area reconstruction and high-priced complexes, and the prices of listed properties have fallen, expanding the decline."

The downward trend was clearly seen in the area south of the Han River, where high-priced apartment complexes are concentrated. The three Gangnam districts?Gangnam (-0.12%), Seocho (-0.12%), and Songpa (-0.08%)?saw an expanded decline as some complexes in Banpo and Jamsil-dong traded at urgent sale prices more than 10% below the highest prices. Apartment prices in the southeastern region fell 0.09% compared to the previous week.

Gangdong-gu (0.01%) saw price increases mainly in small to medium-sized complexes, but the increase narrowed, and Yangcheon-gu (0.01%) saw a reduced rise despite the news of safety inspection approval for reconstruction in Mokdong New Town Complex 9, as buying sentiment weakened.

On the other hand, apartment prices in the 14 districts of northern Seoul rose 0.04%. Gangbuk (0.08%), Dobong (0.08%), and Nowon-gu (0.06%) increased due to demand for low-priced complexes with fewer loan restrictions and development prospects (light rail projects, station area development), but most areas including Mapo-gu (0.04%) showed a trend of narrowing or maintaining the rise.

[Image source=Yonhap News]

In particular, some areas such as Incheon saw a further expansion in apartment price increases due to the balloon effect.

Incheon’s prices rose 0.53% compared to 0.38% the previous week. Yeonsu-gu (0.95%) saw an expanded rise influenced by transportation benefits (GTX-B), Michuhol-gu (0.57%) rose mainly in newly built complexes in the favorable residential environment of Yonghyeon-dong, and Seo-gu (0.55%) increased centered on Cheongna District and Lu1 City, which have good accessibility to Seoul.

Gyeonggi-do rose 0.40% compared to 0.41% the previous week, showing a slight slowdown in the increase. Suwon (0.75%) and Yongin-si (0.48%) rose mainly in areas with transportation benefits such as the Shinbundang Line and Suin Line and good school districts, but the increase narrowed.

The Korea Real Estate Board analyzed, "The recent expansion of government designated adjustment areas, the expansion of submission of funding source plans, and the spread of COVID-19 have dampened market sentiment, slowing the rise."

Anyang-si (0.34%) continues to rise due to the development of transfer centers and transportation benefits (Indeogwon Line, Wolgot-Pangyo Line), and Uiwang-si (0.38%) continues its upward trend due to redevelopment project benefits, but the rise has slightly decreased since the designation as an adjustment area.

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