'Gangnam→Gangbuk' House Price Decline Contagion... Will Gyeonggi-do's 'Balloon Effect' Also Deflate?

Gangnam Reconstruction Complex Prices Continue to Fall by Hundreds of Millions
Prices Also Drop in Mokdong New Town Area
Non-Regulated Areas Like Ansan and Gwangmyeong See Price Increases

[Image source=Yonhap News]

[Asia Economy Reporter Moon Jiwon] The decline in Seoul apartment prices is accelerating. This is due to an increase in urgent sale listings caused by the economic downturn triggered by the novel coronavirus disease (COVID-19), strengthened government regulations, and the ruling party's overwhelming victory in the general election. As the downward trend that began in the Gangnam area spreads to the outskirts of Seoul, attention is focused on the price fluctuations in some parts of the metropolitan area that are still maintaining an upward trend.

According to industry sources on the 25th, the price drop in Gangnam redevelopment complexes in Seoul is steep, with asking prices falling by several hundred million won. Representative examples include Eonma Apartment, Jamsil Jugong Complex 5, and Gaepo Jugong Complex 1. The 76㎡ unit (exclusive area) in Eonma is currently listed at 1.72 billion to 1.75 billion won. Considering that it was traded in the mid-1.9 billion won range as recently as last month, the price has dropped by nearly 200 million won.

The 42.55㎡ unit in Gaepo Jugong Complex 1 was traded for 1.84 billion won on the 16th. Since a unit on the same floor was traded for 2.07 billion won in December last year, the price has fallen by about 230 million won. A representative from real estate agency A in Gangnam-gu said, "While new apartments have seen almost no price drops, urgent sale listings with prices falling by several hundred million won are appearing in Gaepo Jugong Complex 1 and 4, as well as Eonma."

The situation is similar in Songpa-gu redevelopment complexes, where redevelopment expectations have cooled following the opposition party's victory in the general election. The 76.5㎡ unit in Jamsil Jugong Complex 5, which was traded in the 2.1 billion won range last December, now has asking prices dropped to 1.8 billion to 1.82 billion won. The 82㎡ units in this complex are also listed at 1.96 billion to 2 billion won, about 200 million won lower than recent actual transaction prices.

In Songpa-gu, where Jamsil Jugong Complex 5 is located, opposition party candidate Bae Hyunjin from the United Future Party was elected, but since the ruling party won nationwide, it is interpreted that the existing redevelopment regulatory policies are likely to continue, which has influenced the emergence of urgent sale listings.

[Image source=Yonhap News]

This downward trend appears to be spreading to major areas in northern Seoul. According to the Korea Real Estate Agency's weekly apartment price trend survey for the third week of April (as of the 20th), key northern Seoul areas such as Mapo (-0.07%), Yongsan (-0.05%), and Seongdong-gu (-0.02%) have seen a deeper decline compared to the previous week. The so-called No-Dob-Gang areas?Nowon, Dobong, and Gangbuk?which are densely populated with mid-to-low-priced complexes, have maintained a flat trend for two consecutive weeks.

In particular, Yangcheon-gu, which maintained a flat 0% trend for two consecutive weeks, shifted to a 0.05% decline this week. In fact, the Mokdong New Town redevelopment complex area, which is actively pursuing redevelopment, has recently seen a significant price drop of several hundred million won. The 55㎡ unit (2nd floor) in Mokdong New Town Complex 14 was traded for 870 million won on the 25th of last month. Although it is a low floor, considering that a 3rd-floor unit was traded for 980 million won in February, the decline is substantial.

The 47㎡ unit in Mokdong New Town Complex 6 was mainly traded at 1 billion won until early this month, but the current asking price has dropped to 970 million won. Complexes 6 and 9 have conditionally passed the detailed safety inspection for redevelopment, but a second appropriateness review by public institutions remains. Additionally, since multi-homeowners face a heavy burden from property taxes, it is expected that listings will increase ahead of the imposition date on June 1.

However, areas such as Gyeonggi Province and Incheon are still showing price increases due to the 'balloon effect.' In Incheon, buyer sentiment has concentrated mainly in areas with transportation benefits such as GTX-B, resulting in a 0.23% increase compared to 0.21% the previous week. Ansan (0.44%), Gwangmyeong (0.28%), and Anyang City (0.25%) also saw an expanded rate of increase compared to the previous week. However, there is analysis that if the economic downturn continues, the balloon effect in non-regulated areas will also slow down. An industry official explained, "Typically, during an economic downturn, prices start to fall first in Gangnam redevelopment complexes and gradually spread to the outskirts of Seoul and the metropolitan area."

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