Small Apartments Also Surpass the '1.5 Billion Loan Prohibition Line'... Exceeding in 13 out of 25 Districts in Seoul

Appearing in 13 of Seoul's 25 Districts
Only in Gangnam 3 Districts 2 Years Ago
Winning the Lottery but... 1 in 4 Seoul Apartments Is 'Loan-Prohibited'
Layered Regulations Accelerate the 'Smart One Home' Phenomenon

Apartment complexes viewed from Namsan, Seoul. (Photo by Yonhap News)

[Asia Economy Reporter Ryu Tae-min] As housing prices continue to rise, the number of districts in Seoul where the sale price of small apartments has exceeded the "loan prohibition line" of 1.5 billion KRW has increased to 13 out of 25 autonomous districts. This year alone, five districts have seen small apartments priced over 1.5 billion KRW. In Gyeonggi Province, small apartment prices have also been surpassing 1.5 billion KRW in multiple areas.

According to the Ministry of Land, Infrastructure and Transport's Real Transaction Price Information System on the 8th, among the 25 autonomous districts in Seoul, 13 districts recorded transactions of small apartments (exclusive area of 60㎡ or less) at prices of 1.5 billion KRW or more. These include the Gangnam 3 districts, Gwangjin, Dongjak, Mapo, Yangcheon, Yongsan, Seodaemun, Gangdong, Seongdong, Jongno, and Yeongdeungpo districts. In speculative overheated zones such as Seoul, when the market price exceeds 1.5 billion KRW, loans from commercial banks are completely prohibited, making this price a benchmark for high-priced housing.

Until last year, only eight districts?Gangnam 3 districts, Gwangjin, Dongjak, Mapo, Yangcheon, and Yongsan?had small apartments exceeding 1.5 billion KRW, but this year, five additional districts?Seodaemun, Gangdong, Seongdong, Jongno, and Yeongdeungpo?have joined the list. In 2019, only the Gangnam 3 districts had such prices.

In Gangnam-gu, there was even a case where a super-small 40㎡ apartment exceeded the loan prohibition line. In July, a 40.55㎡ (exclusive area) unit in Hyundai Hillstate 2 Complex in Samseong-dong, Gangnam, was sold for 1.55 billion KRW. This was the first case of a unit in this size range surpassing 1.5 billion KRW in transaction price.

This phenomenon is also appearing in Gyeonggi Province. In Gwacheon-si, a 59㎡ unit in Prugio Summit was first traded at 1.5 billion KRW in August last year. Since then, complexes such as Raemian Central Suite and Gwacheon Weverfield have also surpassed the loan prohibition line one after another. Currently, the highest price is a 59㎡ unit in Prugio Summit, which was sold for 1.72 billion KRW in July. In Bundang-gu, Seongnam-si, near Pangyo Station, a 59㎡ unit in Botdeul Village 4 Complex in Sampyeong-dong was traded for 1.45 billion KRW in July, approaching the loan prohibition line.

The sharp rise in small apartment prices is interpreted as an adjustment to match the prices of medium and large apartments. Additionally, there is a preference for a "smart single home," where buyers prefer small apartments over medium-sized ones in the outskirts if prices are similar. With strengthened property taxes such as property tax and comprehensive real estate tax, as well as increased regulations to curb multi-home ownership, demand is concentrating on popular areas with high expected asset value appreciation.

According to Real Estate 114, as of June this year, out of 1,220,279 apartments surveyed in Seoul, 304,173 units (25%) were priced over 1.5 billion KRW. This proportion has roughly doubled compared to June 2019 (13.2%).

Ye Kyung-hee, senior researcher at Real Estate 114, explained, "As the burden of owning multiple homes increases, the 'smart single home' phenomenon is becoming more prominent, especially in major areas of Seoul. While market liquidity has increased, relatively insufficient supply is also a factor driving housing prices."

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