Seoul Outskirts Soar as Even Mid-Low Priced Apartments Rise While Trying to Control Gangnam Apartment Prices

While Gangnam 3 Districts' Sale Price per 3.3㎡ Rises 2%
Geum, Gwan, Gu and No, Do, Gang Soar 6-7%... Balloon Effect
Apartments Under 900 Million Won Decrease... Home Buying 'Makmak'

[Asia Economy Reporter Moon Jiwon] The price increase of mid-to-low-priced apartments on the outskirts of Seoul is showing unusual signs. While the average price per 3.3㎡ of apartments in the Gangnam 3 districts?Gangnam, Seocho, and Songpa?has risen by just about 2% this year, the 'Nowon, Dobong, Gangbuk districts (No·Do·Gang)' and 'Geumcheon, Gwanak, Guro districts (Geum·Gwan·Gu)' have surged by 6-7%.

Although the prices of high-end homes in the Gangnam area have stalled due to the government's strong regulations, the significant rise in mid-to-low-priced apartment prices has actually raised the threshold for ordinary citizens to own their own homes.

On the 9th, Asia Economy analyzed the KB Housing Price Trend time series data and found that the average apartment sale price per 3.3㎡ in the Gangnam 3 districts rose from 54.91 million KRW in December last year to 56.02 million KRW last month, an increase of about 2.01%. Compared to the previous five months from July to December last year, when prices rose by 8.5%, the rate of increase has noticeably slowed.

However, during the same period, the average price per 3.3㎡ of apartments in No·Do·Gang rose from 20.84 million KRW to 22.27 million KRW, up 6.86%, and in Geum·Gwan·Gu from 22.32 million KRW to 23.92 million KRW, up 7.16%. These figures far exceed the Seoul average increase rate of 4.86% during this period.

Compared to the previous five-month average increase rates of 3.61% for No·Do·Gang and 6.7% for Geum·Gwan·Gu, the price rise trend this year is steepening.

While the Gangnam housing market has contracted due to various real estate regulations such as the ban on loans for homes exceeding 1.5 billion KRW and the reconstruction excess profit recovery system, apartment prices in the outskirts have risen sharply due to a 'balloon effect.'

This trend is also confirmed by KB Kookmin Bank's 'quintile average apartment price.' The top 20% (5th quintile) apartment prices in Seoul were ▲181.304 million KRW in March ▲180.794 million KRW in April ▲180.320 million KRW in May, showing a decline for three consecutive months, while the remaining 80% of apartments have been steadily rising since mid-last year.

A KB real estate official explained, "Seoul apartment sale prices are rising mainly in the Gangbuk area," adding, "There is an increasing demand for relatively lower-priced listings."

As this balloon effect in the market continues, concerns are emerging that apartments priced below 900 million KRW in Seoul are rapidly decreasing. For example, the Daerim 2nd Complex 84.95㎡ (exclusive area) in Sindorim-dong, Guro-gu, was traded in the mid-800 million KRW range until last year, but this year the transaction price has risen to around 950 million KRW. The current asking price is also set between 960 million and 970 million KRW.

The actual transaction price of Doosan 114.99㎡ in Bongcheon-dong, Gwanak-gu, exceeded 900 million KRW for the first time in January and rose to 948 million KRW last month. A representative of A Real Estate in Guro-dong, Guro-gu, said, "Although the economy is not good, prices have risen significantly mainly for newly built apartments," adding, "Mid-to-low-priced apartments are also approaching the government's loan threshold of 900 million KRW."

In the market, there is a growing expectation of economic recovery, reviving buying sentiment for homes in the Gangnam area, and with large-scale development projects continuing in Yongsan and Jamsil, there are forecasts that the housing price rise will continue.

However, since the government and the ruling party have stated their intention to continuously pursue 'housing price stabilization' policies, many believe a sharp rebound will be difficult. Kwon Il, head of the real estate info research team, predicted, "The housing market in the second half of the year will show a stable or slightly strong trend as both positive and negative factors coexist."

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