Despite Warnings That "Seoul House Prices Are High"... Apartment Sales and Jeonse Prices Soar

Korea Real Estate Board June 4th Week Apartment Price Trends
Capital Region Up 0.35%, Record High Increase
Seoul Up 0.12%... Rising Despite Housing Price Warnings
Jeonse Price Increase Widens... Concerns Over Housing Instability

[Image source=Yonhap News]

[Asia Economy Reporter Moon Jiwon] Despite the possibility of the Bank of Korea raising its base interest rate and the government's continued warnings of falling housing prices, apartment prices in Seoul and the metropolitan area continue to rise. This is because asking prices remain high due to expectations of deregulation and successive development benefits such as the Metropolitan Area Express Train (GTX). In particular, in Seoul, the increase in jeonse (long-term lease) prices expanded further this week, raising concerns about worsening housing instability for low-income residents.

According to the 'Weekly Apartment Price Trend for the Fourth Week of June' released by the Korea Real Estate Agency on the 1st, as of the 28th of last month, apartment prices in the metropolitan area rose by 0.35%, the same as the previous week. The metropolitan area recorded the highest increase since the related statistics began to be published in May 2012, with the rise expanding by 0.01 percentage points last week. It has maintained a steep upward trend with a 0.35% increase for two consecutive weeks.

In Seoul, apartment prices rose by 0.12% this week. Although buying demand has decreased due to the Bank of Korea's mention of a possible interest rate hike within the year and the Financial Stability Report warning that "housing prices in Seoul are overvalued and could sharply decline if internal or external shocks occur," asking prices remain high.

In Seoul, the highest price increases were observed in Nowon-gu (0.26%), Seocho-gu (0.17%), Gangnam-gu (0.15%), and Songpa-gu (0.15%), where major reconstruction projects are concentrated. Dongjak-gu (0.18%) and Yangcheon-gu (0.13%) also saw significant apartment price increases, mainly in reconstruction areas or near subway stations.

In Incheon, apartment prices rose by 0.57% this week, an increase from 0.48% the previous week. Yeonsu-gu (0.74%) surged mainly in small complexes in Okryeon and Yeonsu-dong, which have favorable living conditions. Michuhol-gu (0.71%), Seo-gu (0.62%), and Bupyeong-gu (0.58%) also experienced significant increases. In Gyeonggi-do, the growth rate slightly decreased from 0.44% last week to 0.43% this week. However, areas benefiting from GTX such as Dongan-gu in Anyang (0.99%), Osan-si (0.96%), Siheung-si (0.85%), Uiwang-si (0.78%), and Gunpo-si (0.79%) continued to show strong upward trends.

Although the Bank of Korea warned in its Financial Stability Report on the 22nd of last month that "housing prices, especially in Seoul, are overvalued when evaluated through major statistical indicators such as long-term trends and price-to-income ratio (PIR)," buying demand has not weakened easily. Deputy Prime Minister and Minister of Strategy and Finance Hong Nam-ki also requested at the real estate market inspection meeting on the 30th of last month, "We ask that market participation and decision-making be based on accurate information and rational judgment rather than chasing purchases."

The jeonse market is also becoming increasingly unstable. Seoul apartment jeonse prices rose by 0.10% this week, up from 0.09% the previous week. The upward trend continued mainly in areas with relocation demand due to redevelopment projects, newly built complexes near subway stations, and those with good educational environments. Seocho-gu (0.34%), which has high relocation demand from redevelopment projects, saw significant jeonse price increases mainly in Seocho, Jamwon, and Bangbae-dong, followed by Songpa-gu (0.19%), Dongjak-gu (0.16%), Gangdong-gu (0.15%), and Gangnam-gu (0.12%).

In Incheon, the jeonse price increase rate expanded from 0.41% to 0.44%, following the rise in sales prices. In Gyeonggi-do, jeonse prices rose by 0.20%. Siheung-si (0.66%), Osan-si (0.57%), Danwon-gu in Ansan (0.56%), and Anseong-si (0.50%) continued their upward trend, mainly in undervalued mid- to low-priced complexes.

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