Seoul Apartment Price Increase Widens Further... Sejong Turns to Decline After 81 Weeks

Korea Real Estate Board Weekly Apartment Price Trends for 3rd Week of May
Seoul Apartment Price Increase Rate 0.09%→0.10%
Buying Demand Grows on Expectations of Reconstruction and Property Tax Relief
However, Sejong Apartment Prices Turn Down After 81 Weeks

Citizens are overlooking the city from Namsan Park in Seoul.
[Image source=Yonhap News]

[Asia Economy Reporter Moon Jiwon] The rise in Seoul apartment prices has further expanded. Following the inauguration of Mayor Oh Se-hoon and growing expectations for the easing of reconstruction regulations, the recent calls within the Democratic Party of Korea for reforms in real estate policies, such as the relaxation of comprehensive real estate tax, are interpreted as factors that have intensified apartment buying demand.

According to the weekly apartment price trend for the third week of May announced by the Korea Real Estate Board on the 20th, as of the 17th, apartment prices in Seoul rose by 0.10%, an increase from the previous week's 0.09%. In Seoul, the growth rate had dropped to 0.05% in the first week of April before Mayor Oh's inauguration but has been steadily increasing since then.

The government is accelerating public development projects under the 2·4 Housing Supply Plan, but the upward trend in apartment prices shows little sign of slowing. The Real Estate Board analyzed, "Although transaction volumes have decreased due to concerns over supply measures such as the announcement of the third urban complex project candidate sites and holding tax burdens, prices are rising mainly in complexes where price increase expectations exist."

In Seoul, the upward trend was particularly strong in areas where major reconstruction projects are concentrated. Nowon-gu (0.21%) saw the largest increase in apartment prices in Seoul, driven by strong buying demand centered on mid- to low-priced complexes. Seocho-gu (0.20%) rose mainly in Banpo and Seocho-dong, Songpa-gu (0.16%) saw expanded increases centered on mid- to large-sized apartments in Jamsil-dong and reconstruction complexes in Pungnap-dong. Gangnam-gu (0.13%) also experienced price increases mainly in Daechi-dong, Apgujeong, and Dogok-dong, areas with high school district demand.

The rapid rise in reconstruction complex prices has continued since Mayor Oh's inauguration. Seoul City recently designated four areas?Apgujeong, Yeouido, Seongsu, and Mokdong?as land transaction permission zones due to the unusual rise in housing prices, but this move was rather perceived as preparatory work for easing reconstruction regulations, which heightened market expectations. In fact, Yangcheon-gu (0.10%) has seen buying demand concentrate near Mokdong, which is included in the land transaction permission zone.

The rise in Seoul apartment prices is also analyzed to have been influenced by the Democratic Party of Korea's signals for regulatory easing. After losing the Seoul mayoral by-election, the Democratic Party has continued discussions contrary to its previous stance, including raising the thresholds for comprehensive real estate tax and capital gains tax, and postponing the imposition of capital gains tax surcharges. As a result, market expectations that the Democratic Party may ease regulations before next year's presidential election have grown, leading to stronger buying demand over selling.

In Incheon, the apartment price increase rate slowed slightly from 0.53% last week to 0.47% this week. Gyeonggi-do rose by 0.32% this week, up from 0.31% the previous week. Siheung-si (0.86%), newly designated as part of the 3rd new town, continues to show a high increase rate, while Ansan-si (0.70%) and Uiwang-si (0.69%) also saw significant price rises due to transportation benefits.

However, Sejong-si, where housing prices rose significantly last year due to the administrative capital relocation issue, saw apartment prices fall by 0.10% this week, marking a decline for the first time in 81 weeks since the fourth week of October 2019. The Real Estate Board explained, "The shift from rising to falling prices is due to high listing prices and holding tax burdens."

Citizens are overlooking the city from Namsan Park in Seoul.
[Image source=Yonhap News]

The jeonse (long-term lease) market showed a generally similar pattern to last week. Seoul apartment jeonse prices rose by 0.03%, the same as the previous week. Jeonse prices increased in areas with relocation demand due to reconstruction and other redevelopment projects, but overall remained stable due to the seasonal off-peak period, increased new supply, and fatigue from rapid price rises.

In Seoul, jeonse prices rose significantly in Nowon-gu (0.10%) and Seocho-gu (0.07%), which also had high apartment price increases. However, Songpa-gu (0.02%), Gangnam-gu (0.01%), and Gangdong-gu (0.00%) showed stagnation due to increased supply. Yangcheon-gu (-0.04%) continued its downward trend.

Gyeonggi-do's apartment jeonse price increase rate narrowed from 0.13% to 0.12%. Siheung-si (0.63%) saw jeonse price increases mainly in newly built Baegot New Town with good living conditions, and Dongducheon-si (0.37%) rose mainly around Jihyeong-dong station area. Bundang-gu in Seongnam (-0.12%) shifted to a decline due to increased jeonse listings from new supply in nearby areas.

Sejong's apartment jeonse prices also fell by 0.07%. The Real Estate Board explained, "The decline continued due to the seasonal off-peak period and new supply."

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