Is "Smart One House" the Answer?… Seoul Apartment Prices Unyielding Despite Tightening Measures

First Week After July 10 Measures... 0.09% Increase
Notable Rise in Gangnam 4 Districts and Mayongsung
Government Measures Instead Lead to Concentrated Growth in Gangnam

[Asia Economy Reporter Lee Chun-hee] Despite the government’s successive announcements of real estate policies aimed at curbing housing prices in Seoul, including Gangnam, the upward trend in Seoul’s housing prices appears to be intensifying. As high-ranking public officials from the Blue House and other institutions have been disposing of non-Gangnam or provincial properties instead of their existing Gangnam-area homes, the perception that "owning one smart property is the answer" is spreading.

According to the Korea Real Estate Board on the 17th, the Seoul apartment price index for the first week after the July 10 real estate measures was up 0.09% as of the 13th compared to the previous week. Notably, the leading areas known as the Gangnam 4 districts (Seocho, Gangnam, Songpa, Gangdong) and "Mayongseong" (Mapo, Yongsan, Seongdong districts) showed remarkable price increases.

House prices in Mapo-gu and Songpa-gu rose by 0.13% compared to the previous week, marking the highest increase within Seoul. Gangnam-gu and Gangdong-gu also increased by 0.11%, ranking 4th and 5th in growth rates respectively. Dobong-gu took 3rd place with a 0.12% rise. Yongsan-gu rose 0.10%, Seocho-gu 0.09%, and Seongdong-gu 0.07%, following behind.

The government’s strategy with this measure is to increase various tax rates such as comprehensive real estate tax and capital gains tax on multi-homeowners to raise holding costs and thereby lower housing prices. However, the market appears to be moving in the opposite direction. The government’s measures are instead causing demand to concentrate in Gangnam.

Since the government is focusing on tightening regulations only on multi-homeowners under the perception that "multi-homeowners = speculative forces" rather than regulating by region, it is considered more beneficial to own just one household with sufficient price growth potential. Among the metropolitan areas, it is more advantageous to move to key locations such as Seoul, and within Seoul, Gangnam. In fact, high-ranking multi-homeowner officials such as Chief Secretary Noh Young-min and Land, Infrastructure and Transport Secretary Yoon Sung-won from the Blue House have been prioritizing the sale of provincial homes in Cheongju and Sejong while keeping their Gangnam properties.

Banpo Apartment in Seocho-gu, Seoul, which Chief Presidential Secretary Noh Young-min decided to sell. [Image source=Yonhap News]

Additionally, the government, which had maintained the stance that "housing supply is sufficient," hastily moved to expand supply in the metropolitan area as its approval ratings dropped, further fueling this trend. Although the government promised a significant increase in supply, since most of the directions were already proposed, it is expected to have little noticeable effect. The government is currently unable to establish effective measures, such as pressuring Seoul City to lift the Green Belt (development restriction zone).

Meanwhile, Jin Sung-jun, a Democratic Party lawmaker who appeared as a panelist on MBC’s "100-Minute Debate" the day before, seemed to acknowledge the limitations of the government’s measures in stabilizing housing prices by stating in a YouTube broadcast after the show that "(housing prices) will not fall" and "Is this something new?"

An industry insider said, "Ultimately, both the government and the market agree that supply must be increased. However, it is difficult to easily agree with pushing for Green Belt deregulation, which raises doubts about its effectiveness, while keeping measures that could easily increase urban supply such as reconstruction and redevelopment tightly restricted."

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