Apartment Prices: High-End 'Stalling', Mid-Low Range 'Jumping'... Increasing Worries for Ordinary People

High-End Complex Prices Rose, But Mid-Low-End Complex Prices Rose More
Soaring Mid-Low-End Sale and Jeonse Prices Cause Hardship for Ordinary People
Funds Flow to Mid-Low-End Due to Strengthened High-End Housing Regulations
30s Facing Difficulty Buying Homes Also Impacted by Panic Buying

[Asia Economy Reporter Moon Jiwon] Despite the government's successive real estate measures, the prices of mid-to-low-priced apartments in Seoul are soaring, leading to an overall upward leveling of housing prices in the city. Although the price increase of high-end apartments in areas like Gangnam, which have been the main targets of regulations, has slowed, the prices of the more affordable lower 20% housing have surged sharply, causing instability in the living conditions of ordinary citizens.

According to KB Kookmin Bank's KB Monthly Housing Market Trends on the 7th, the price of apartments in the lower 20% in Seoul rose from 374.67 million KRW in January to 430.76 million KRW last month, an increase of 14.97% in just seven months. This rise is 2.77 times higher than the 5.4% increase in the upper 20% apartment prices, which went from 1.78446 billion KRW to 1.8816 billion KRW during the same period.

The increase in prices of the lower 20% apartments in Seoul this year is steep even compared to previous years. Last year, prices rose by 18.77 million KRW, but this year, in just seven months, they jumped by 56.09 million KRW, more than double. The prices of the lower 40% of homes also surpassed the 600 million KRW mark in February and reached 687.88 million KRW in August, approaching 700 million KRW. The prices of the upper 60% homes are close to the loan restriction threshold of 900 million KRW, currently at 870.97 million KRW.

Looking at the monthly housing price trend survey by the Korea Appraisal Board, the results are similar. While the average price of apartments in the lower 20% rose from 297.15 million KRW in January to 303.36 million KRW last month, a 2.08% increase, the upper 20% prices actually fell by 0.39%, from 1.81068 billion KRW to 1.80354 billion KRW. Although the Appraisal Board's statistics tend to be lower than private statistics, the upward trend in mid-to-low-priced housing was clear.

The dominant analysis is that the significant rise in mid-to-low-priced complexes this year is due to the government's successive regulatory measures. As the government strengthened holding tax burdens and loan restrictions on high-priced homes, liquidity has shifted significantly toward mid-to-low-priced complexes. Additionally, due to the subscription system unfavorable to younger generations, many in their 30s, who find it harder to own a home, have engaged in 'panic buying' mainly in the outskirts of Seoul, further driving up prices.

In Sangye-dong, Nowon-gu, where mid-to-low-priced complexes are concentrated, Sangye Jugong Complex 6, with an area of 58.01㎡, was mostly priced in the mid-500 million KRW range at the beginning of the year but was traded for 714 million KRW on the 14th of last month, rising by about 150 million KRW. In Junggye-dong, Nowon-gu, Cheonggu 3rd Complex 84.77㎡ was traded for 1.109 billion KRW on the 8th of last month, and Geonyeong 3rd Complex 84.9㎡ reached a record high of 1.05 billion KRW on July 15.

Accordingly, the quintile ratio, which divides the average price of the upper 20% by the average price of the lower 20%, is gradually decreasing. The quintile ratio typically indicates residential polarization, so a lower value is generally positive. However, in Seoul’s case, since mid-to-low-priced apartment prices have risen more sharply than high-end complexes, the drop in the index cannot be seen as an effect of residential stability.

A prospective newlywed, Mr. A, said, "Even in the outskirts, housing prices have risen so much that it is difficult to prepare a newlywed home unless it is an old house with no positive factors," adding, "Jeonse prices have also risen significantly, so I feel frustrated." Ham Youngjin, head of the Zigbang Big Data Lab, explained, "In Nowon-gu and Gangseo-gu, apartments priced around 500 to 600 million KRW are setting new record highs, and most buyers are actual residents," adding, "However, prices in high-end complexes like Gangnam are clearly slowing down."

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