'Is a Big House Cheaper?'... The Secret of Sale Prices

Price Segmentation by Area, Layout, and Orientation
Demand Characteristics Cause 'Reversal Phenomenon' in Various Locations

High Unit Prices for 'Small High-Rise' Units
Up to 7 Million KRW per 3.3㎡ Difference

Terrace and Underground Service Spaces Make Previously Unpopular 1st Floors More Expensive and Popular

[Asia Economy Reporter Lee Chun-hee] "The sale price of 84㎡ (exclusive area) is 15 million KRW cheaper than that of 74㎡?"

The sale price of 'Hoban Summit Sky Central' in Yeongjong International City, Jung-gu, Incheon, which is scheduled for sale on the 13th, makes one tilt their head in confusion at first glance. The sale prices for the two areas of 74㎡ and 84㎡ in this complex are 304.9 million to 349.9 million KRW for 74㎡, and 334.3 million to 389.4 million KRW for 84㎡. Compared to the highest price of 74㎡B units on the 5th floor or higher at 349.9 million KRW, the sale price of 84㎡C units on the 1st floor is 334.3 million KRW, which is more than 15 million KRW cheaper. This strange situation arises where the exclusive area is 10㎡ larger, but the price is actually cheaper. Ten square meters corresponds roughly to the size of one room.

This phenomenon also appeared recently in Seocho-gu's 'LeaL Shinbanpo' in Seoul. In this complex, the sale price of a 54㎡ unit on the 4th floor or higher ranged from 1.098 billion to 1.137 billion KRW, which was up to about 42 million KRW more expensive than the 59㎡ unit on the 2nd floor priced at 1.095 billion KRW. Here too, the larger 5㎡ housing type was priced lower.

According to the industry on the 7th, as sale prices have become more segmented according to floor, building placement, and orientation, price inversion phenomena where small and medium-sized apartments are priced higher than medium and large-sized ones have been occurring continuously. This is the result of companies actively reflecting demand analysis results in setting sale prices to increase sales performance. To reduce price differences based on area, unit sale prices for smaller units are set higher, and different prices are assigned by dividing types such as A, B, and C according to building placement and orientation. Also, the sale price of the 1st floor, which is less preferred except by elderly or families with children due to privacy concerns, is set the lowest.

In fact, when examining the sale price per 3.3㎡ in the two complexes, Hoban Summit Sky Central ranges from 9.99 million to 11.7 million KRW, and LeaL Shinbanpo ranges from 43.8 million to 51.12 million KRW, with differences of up to 7 million KRW per 3.3㎡. In both cases, the highest prices were for small-sized high-floor units.

Regional demand characteristics are also reflected. In the metropolitan area where demand for small and medium-sized apartments is higher, cases where the sale price per 3.3㎡ of small apartments is set higher than that of medium and large apartments are frequent. For example, in Gwangmyeong New Town 2R district, the cooperative member sale price for 59㎡ is set at around 13 million KRW per 3.3㎡, while 84㎡ is priced at around 12 million KRW per 3.3㎡.

▲ Floor plan of 77㎡T unit at 'Le El Daechi' in Gangnam-gu, Seoul (Provided by Lotte Construction)

There are also cases where the 1st floor price, perceived as less preferred, is higher. This happens when the characteristics of the 1st floor, previously a disadvantage, are utilized by providing additional terrace space or adding basement space as a service. In such cases, despite the price increase, popularity actually rises.

A representative example is 'LeaL Daechi' in Gangnam-gu, Seoul, supplied last November. This complex provided one terrace unit each for 55㎡, 59㎡, and 77㎡. The sale price was set up to nearly 150 million KRW higher than units of the same area. Nevertheless, the competition rates were 332:1, 183:1, and 461:1 respectively, higher than those of mid-floor units of the same area. The disadvantages of low floors were turned into advantages, creating high demand.

An industry official explained, "Demand analysis and specialized design are becoming important factors determining the success or failure of sales," adding, "In this process, the phenomenon of price inversion is also increasing."

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