Seoul Apartment Prices Rise More in Outer Suburban Mid-Low Range

Rent Protection Act Enforced for 3 Months
Low-Price Increase Rate Twice That of High-Price
Dobong and Nowon Districts See Double-Digit Growth Rates

[Asia Economy Reporter Donghyun Choi] During the three months since the implementation of the Housing Lease Protection Act, which includes the right to request contract renewal and the cap on monthly rent and deposit, the price increase rate of low-priced apartments in Seoul was found to be twice that of high-priced apartments.

According to the monthly housing price trend statistics from KB Kookmin Bank on the 3rd, the average apartment price in the 1st quintile (bottom 20%) in Seoul last month was 456.38 million KRW, up 7.9% from 423.12 million KRW in July, just before the new lease law was enacted. In comparison, the average apartment price in the 5th quintile (top 20%) rose 4% from 1.84605 billion KRW to 1.92028 billion KRW during the same period, making the increase rate twice as high for the lower-priced apartments.

This is understood to be because the recent rise in housing prices has been mainly driven by the outskirts. After the implementation of the right to request contract renewal, the shortage of jeonse (long-term deposit lease) and the rise in jeonse prices continued, putting pressure on the sales prices of low-priced apartments in the outskirts of Seoul, which can partially absorb the jeonse demand. In fact, the average sales price per square meter of Seoul apartments rose 6.6% over three months, but in Dobong-gu, the increase rate reached 11.0%. Additionally, Nowon-gu recorded a double-digit increase rate of 10.3%, and the top regions in terms of increase rate over three months were all outskirts areas, including ▲Gangbuk-gu (9.6%) ▲Jungnang-gu (9.4%) ▲Seongbuk-gu (8.2%) ▲Eunpyeong-gu (8.6%).

The upward trend in low-priced apartment prices has been prominent over the past year. Last month, the average apartment price in the 1st quintile in Seoul jumped 27% (97.12 million KRW) compared to 359.26 million KRW in October last year. Compared to October 2018, two years ago (345.40 million KRW), the increase rate reached 32%. Comparing the annual increase rates, the rise in the past year is more than five times that of the previous year.

The price of apartments in the 1st quintile in Seoul remained at around 220 million to 250 million KRW from December 2008, when KB Kookmin Bank began compiling the statistics, until November 2015, before surpassing 250 million KRW in December 2015. After that, it broke through 300 million KRW in December 2017, two years later, and 350 million KRW in December 2018, accelerating the price increase trend. Then, it exceeded 400 million KRW for the first time in June this year, and quickly surpassed the 450 million KRW mark last month, just four months later.

However, as mid- to low-priced apartment prices surged, the 5th quintile ratio of Seoul apartment prices last month was 4.2, the lowest level since May 2017 (4.2). The 5th quintile ratio is the value obtained by dividing the average price of the top 20% of apartments by the average price of the bottom 20%, and a higher ratio means a greater price gap.

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