Housing Prices Continue to Hit Record Highs Amid Reconstruction Riding Shintong Planning

[Asia Economy Reporter Kim Hyemin] While the Seoul real estate market has cooled and housing prices have stalled, apartment complexes with anticipated reconstruction projects are seeing record-high transactions. Although transaction volumes have decreased, each deal is setting new price records. This is attributed to the growing expectations as reconstruction complexes are increasingly joining Seoul City's Rapid Integrated Planning initiative.

According to Real Estate R114 on the 14th, as of the 10th, the sales price increase rate for reconstruction apartments in Seoul was 0.11%, up from 0.05% the previous week. This contrasts with the general apartment sales price increase rate, which dropped from 0.09% in mid-November to 0.05% within a month.

This gap was particularly noticeable in Gangnam-gu. On the 3rd, the difference was more than double, with general apartments at 0.06% and reconstruction apartments at 0.14%. A week later, the rates diverged further to 0.05% and 0.34%, respectively. While the general apartment sales price increase rate continued to decline, the reconstruction apartment rate rose by 0.2 percentage points compared to the previous week.

In fact, record-high transactions continue despite the transaction freeze. According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system, a 128㎡ unit in Hanbo Mido Mansion, Daechi-dong, Gangnam-gu, was sold for 4.14 billion KRW on the 8th of last month. This was 490 million KRW higher than the previous record price of 3.65 billion KRW set in August. Similarly, an 84㎡ unit in Eunma Apartment, Daechi-dong, was sold for 2.82 billion KRW on the 15th of last month, surpassing the previous record of 2.78 billion KRW set in August.

The continuation of record-high prices in reconstruction complexes despite the transaction freeze is attributed to Seoul City's active push for the Rapid Integrated Planning, which aims to shorten reconstruction review periods. The two complexes that previously set record prices have also joined or are in the process of joining this initiative. Additionally, these apartments are high-priced homes exceeding the 1.5 billion KRW mortgage loan limit, meaning they are less affected by loan regulations.

However, some point out that the Rapid Integrated Planning may also need to slow down, considering signs of overheating such as simultaneous surge in applications. A Seoul City official stated, "Considering concerns that the entire city could become a construction site and the instability in the rental market due to a surge in relocation demand after demolition, we plan to establish priority criteria," adding, "Building aging will be one of the criteria."

Yoon Jihae, Senior Researcher at Real Estate R114, said, "Currently, housing market transactions are virtually non-existent," but added, "Until the supply-demand imbalance is partially resolved, price volatility is likely to increase again depending on specific issues."

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