Gangnam and Mapo Actual Transaction Prices Fall for the First Time in 7 Months... Last Month, 4 out of 10 Seoul Apartments Sold at Lower Prices

Major Areas Including Gangnam, Songpa, and Mapo

Actual Transaction Prices Fall for the First Time in 7 Months

[Asia Economy Reporter Kim Min-young] The actual transaction prices of apartments in major Seoul areas such as Gangnam, Songpa, and Mapo have turned downward compared to the previous month for the first time in seven months. A worsening buyer sentiment is being observed to lead to actual price declines. Among apartments sold in Seoul last month, the proportion of transactions at prices lower than the previous deal reached 40%, raising analyses that the upward trend in Seoul apartment prices may be breaking. Experts view the market as difficult to predict in direction due to a complex interplay of factors including unstable jeonse and monthly rent prices, a decrease in new housing supply, interest rate hikes, and the presidential election.

According to the Korea Real Estate Board on the 16th, the actual transaction price index for apartments in the southeastern region of Seoul, including Gangnam, Seocho, Songpa, and Gangdong districts, fell by 0.03% in October compared to the previous month. The western region, including Mapo, Seodaemun, and Eunpyeong districts, also dropped by 0.50%. This marks the first decline in the actual transaction price indices for these two regions in seven months since March. The overall Seoul apartment price transaction index rose by only 0.42%, recording the smallest increase since March this year (0.27%). The preliminary figure for November’s Seoul apartment transaction price index is also predicted to fall by 0.91% compared to the previous month. Due to fatigue from rapid price increases, loan regulation measures, and interest rate hikes, buyer sentiment has frozen, leading to a series of contracts at prices lower than before.

The proportion of transactions below previous peak prices is also increasing. According to apartment transaction trends in the metropolitan area submitted by the Ministry of Land, Infrastructure and Transport to Kim Hoe-jae, a member of the Democratic Party, the proportion of declining transactions in Seoul apartments last month was 41.2%, up from 30.1% in October. The proportion of declining transactions in September was 23.6%. This shows a cycle where buyer sentiment contraction leads to increased listings, which in turn leads to more declining transactions, further suppressing buyer sentiment.

According to the Ministry of Land, Infrastructure and Transport’s actual transaction price disclosure system, a 45.9㎡ (exclusive area) unit in Nowon-gu’s Sanggye Jugong Complex 7 was sold for 720 million KRW (15th floor) in July but changed hands in October for 33 million KRW less at 687 million KRW. Similarly, a 58.01㎡ unit in the nearby Sanggye Jugong Complex 4 was traded for 815 million KRW in July but sold for 68 million KRW less at 747 million KRW this month. Yoon Ji-hae, a researcher at Real Estate R114, said, "This is a market dominated by urgent sales amid a transaction freeze that surpasses the transaction cliff. Unless the property offers good cost-effectiveness, there is simply no demand."

However, experts say it is still too early to conclude that the real estate market has officially entered a full-fledged downturn. This is because negative factors such as loan regulations and interest rate hikes coexist with instability in the jeonse and monthly rent markets, the presidential election, deregulation of redevelopment and reconstruction, and a decrease in new housing supply. Researcher Yoon said, "The market is expected to remain cautious, waiting for policy changes until the presidential election. With various factors mixed, it is difficult to predict the market’s direction."

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