Seoul Small Apartments Enter the 400 Million Won Era

KB Housing Price Trends July: Average Sale Price of Small Apartments in Seoul Reaches 413.8 Million KRW
First Time Surpassing 400 Million KRW... Panic Buying Drives Up Prices of Low-Cost Apartments in Geumgwan-gu and Nodo-gang
Harder for Working-Class to Buy Homes... "Rushing to Purchase Small Apartments"

[Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] The era of 400 million KRW small apartments in Seoul has begun. According to the monthly KB Housing Price Trend report on the 29th, the average sale price of small apartments in Seoul this month surpassed 400 million KRW for the first time, reaching 413.8 million KRW. This is the highest price since KB Kookmin Bank began compiling this statistic in January 2016. Small apartments are defined as those under 40㎡ (exclusive area).

Low-priced small apartments are mainly concentrated in the outskirts of Seoul, such as 'No-Do-Gang' (Nowon, Dobong, Gangbuk districts) and 'Geum-Gwan-Gu' (Geumcheon, Gwanak, Guro districts). These areas have poor transportation for commuting to downtown Seoul, and most apartments are over 30 years old and dilapidated, but even these prices have surged rapidly, making it increasingly difficult for ordinary citizens to own a home.

In particular, following the June 17 real estate measures, panic buying by people in their 30s has continued, leading to a sharp rise in small apartment sale prices. From the end of last year to July, small apartment prices in Seoul rose by 13.3%, while medium-small apartments increased by 12.4%. Medium-sized apartments (62.8?95.9㎡) rose by 10.0%, medium-large (95?135㎡) by 9.4%, and large apartments (over 135㎡) by 6.2%. The price increase for small apartments is more than twice that of large apartments.

Sanggye Jugong Complex 6 Overview (Source: Supreme Court Court Auction Information)

In fact, a 36.1㎡ apartment in the 30-year-old Jugong 2 Complex in Chang-dong, Dobong-gu, was traded for 410 million KRW (14th floor) on the 4th, setting a new record. This is a 60 million KRW increase in just over a month and a half since it was traded for 350 million KRW (9th floor) on May 19. A 31.9㎡ apartment in Jugong 5 Complex, Sanggye-dong, Nowon-gu, built in 1987, also recorded a real transaction price of 660 million KRW (2nd floor) on the 11th. After being traded for 550 million KRW (2nd floor) on the 10th of last month, the price rose by over 100 million KRW in about a month. A 32.3㎡ apartment in Jugong 2 Complex, Guro-dong, Guro-gu, built 33 years ago, was contracted for 478 million KRW (10th floor) on the 13th. Compared to the 385 million KRW (4th floor) sale at the beginning of the year, the price rose by nearly 100 million KRW in half a year.

There is also analysis that high-priced apartment sales, such as Gangnam area reconstruction projects, have contributed to the rise in the average price of small apartments in Seoul. For example, a 39.5㎡ apartment in Samik Daecheong, Gaepo-dong, Gangnam-gu, which is over 37 years old and currently undergoing vertical extension remodeling, was traded for 1.11 billion KRW (7th floor) on the 7th. In the Gangnam area, it is not difficult to find small apartments priced over 1 billion KRW.

In this survey, the average sale price of medium-small apartments in Seoul also exceeded 700 million KRW for the first time, reaching 700.18 million KRW. Medium-small apartments are defined as those between 40 and 62.8㎡. For instance, a 59.5㎡ apartment in Gwanak Prugio, Bongcheon-dong, Gwanak-gu, was traded for 710 million KRW (19th floor) on the 6th and contracted for 788 million KRW (6th floor) on the 18th. This is an increase of nearly 80 million KRW in about 10 days. This apartment size has already seen over 10 transactions this month, with buying demand pushing prices up. A 58.0㎡ apartment in Sanggye Jugong 3 Complex, Sanggye-dong, Nowon-gu, was traded at a record price of 710 million KRW (10th floor) on the 8th, and a 59.9㎡ apartment in the 20-year-old Doosan Apartment in Gwanak-gu was sold for 870 million KRW (19th floor) on the 9th, setting a new record.

Experts analyze that the rapid rise in high-priced apartment prices is pushing up prices not only for medium-sized but also medium-small and small apartments. Park Won-gap, Senior Research Fellow of Real Estate at KB Kookmin Bank, explained, "Overall, housing prices are rising rapidly, and with tightened loan regulations, real buyers who panic-buy are rushing to purchase even small apartments, and gap investment demand with jeonse (long-term deposit lease) on small apartments is also joining in, causing medium-small apartment prices to rise."

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