Gangnam 3 Districts See 'Largest Monthly Drop' in 8 Years... Seoul Apartment Prices Turn Down

[Asia Economy Reporter Yuri Kim] The three Gangnam districts of Seoul (Gangnam, Seocho, and Songpa) recorded the largest monthly decline in eight years. Last month, Seoul apartment sale prices turned downward for the first time in 11 months.

According to Real Estate 114 on the 1st, Seoul apartment sale prices fell by 0.17% in April, marking a negative turn for the first time in 11 months since May 2019 (-0.04%). In particular, the Gangnam 3 districts recorded a -0.63% change, the largest monthly drop in over eight years since November 2012 (-0.63%), pulling down the overall Seoul market prices. Areas that had risen significantly during the boom are leading the decline.

It is interpreted as a direct hit to apartments in the Gangnam area of Seoul due to the December 16th measures last year, which banned mortgage loans for apartments priced over 1.5 billion KRW, along with investigations into the source of funds. Since March this year, concerns over an economic downturn caused by the novel coronavirus (COVID-19) have added to the downward trend, which is showing signs of spreading beyond Gangnam to other areas.

The Gangnam 3 districts have declined for three consecutive months recently (February -0.02%, March -0.17%, April -0.63%), with the drop widening. This is the result of government regulations combined with the impact of COVID-19. Examining price changes in major apartment complexes located in Gangnam, most have fallen by about 100 million KRW since the December 16th measures were announced until April this year. The Eonma Apartment in Daechi-dong, a representative Gangnam reconstruction complex, dropped by 130 to 140 million KRW, a 6-7% decline in terms of rate of change.

During the same period, Gaepo Jugong Complex 6 in Gaepo-dong, Gangnam-gu, and Shin Hyundai in Apgujeong-dong fell by 115 to 270 million KRW. In Seocho-gu, Banpo Jugong Complex 1, Banpo Xi, and Acro River Park Banpo declined by 75 to 150 million KRW. In Songpa-gu, Jamsil Jugong Complex 5, Jamsil Els, and Jamsil Parkrio in Sincheon-dong dropped by 65 to 175 million KRW.

The downward trend that started in Gangnam is spreading to non-Gangnam areas of Seoul and the Gyeonggi Province region. Yongsan-gu fell by 0.12% in April, and Yeongdeungpo-gu turned weak on a weekly basis in the last week of April. In Gyeonggi Province, Gwacheon (-0.05%), which had led local housing prices, fell, and Wirye New Town (-0.02%) also declined in April. Areas that had led the rise are turning downward one after another starting in April.

This trend is expected to accelerate this month. Following the ruling party's landslide victory in the April general election, regulations targeting speculative demand focusing on loans, taxes, subscription, and source of funds investigations are likely to continue throughout this year. Ahead of the property tax assessment date (June 1), tax-saving listings by multi-homeowners are also increasing. Meanwhile, the first quarter economic growth rate recorded -1.4%, the lowest in 11 years. Yoon Ji-hae, chief researcher at Real Estate 114, said, "Considering that the real estate market also experienced a prolonged decline during past economic downturns, a downward trend is inevitable for the time being."

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