From Gyeonggi Outskirts to Seoul Gangnam Area... Cold Front of Housing Prices Spreads

Seoul Metropolitan Area Real Estate Market Frozen Solid
1 Billion Won Drop in 2nd Phase New Towns Within a Month
Gangdong-gu Sees 0.02% Negative Change
Concerns Over Direct Hit to Yeongkkeuljok if Decline Spreads

View of apartments in the Gangnam area from the Korea International Trade Association in Gangnam-gu, Seoul.
[Image source=Yonhap News]

[Asia Economy Reporters Kim Hyemin and Ryu Taemin] The downward trend in housing prices, which was prominent in the outskirts of Gyeonggi Province, is spreading to new towns with good accessibility to Seoul, such as Seongnam, signaling the full-fledged start of a declining real estate market. Even in the Gangnam area, where Seoul had maintained a strong upward trend, there are cases where the average housing price growth rate has turned negative.

With the perception that housing prices have peaked, combined with loan regulations and interest rate hikes, buying demand has sharply declined, causing the entire metropolitan real estate market to freeze. The market is concerned that if price declines spread, the so-called ‘Youngkkeun-jok’?those who purchased homes with excessive loans?will be the first to be hit hard.

◆ No Effect from Positive Factors... Dongtan and Gwanggyo Prices Drop by 100 Million Won = In Seongnam City, Gyeonggi Province, a complex saw its actual transaction price fall by more than 100 million won in just two months.

According to the Ministry of Land, Infrastructure and Transport’s real transaction price disclosure system on the 27th, Wirye Hoban Verdiium in Changkok-dong, Sujeong-gu, Seongnam City, a part of Wirye New Town, saw its 98.95㎡ (exclusive area) price drop from 1.6 billion won on October 16 to 1.475 billion won on the 2nd. Similarly, in Hanam City’s Hakam-dong, also part of Wirye New Town, Wirye Lotte Castle’s 84.98㎡ unit changed hands at 1.4 billion won on the 27th of last month, down 90 million won from the previous highest price of 1.49 billion won in September. The 75.48㎡ unit in the same complex was traded at 1.35 billion won on the 24th of last month, 70 million won lower than the previous high of 1.42 billion won in October.

A representative from A Real Estate Agency in Hakam-dong, Hanam City, said, "Despite recent transportation improvements announced in Wirye, many homeowners are rushing to sell quickly, causing an accumulation of listings," adding, "The number of successful transactions has sharply decreased, and local real estate offices are expressing difficulties."

This trend is also seen in other second-phase new towns such as Dongtan and Gwanggyo. The 86㎡ unit at BanDo Yubora Ivy Park 8.0 near Dongtan Station in Osan-dong was traded at 1.447 billion won in August, approaching the loan ban threshold of 1.5 billion won, but changed hands at 1.39 billion won earlier this month, a drop of 100 million won. The 84㎡ unit at Samsung Raemian in Da-eun Village, Dongtan Demonstration Area, Bansong-dong, Hwaseong City, was contracted last month at 805 million won, down 45 million won from 850 million won in October.

Additionally, in Iui-dong, Yeongtong-gu, Suwon City, the 120㎡ unit at e-Pyeonhansesang Gwanggyo was sold for 1.88 billion won on the 19th of last month. This area had two transactions at 2 billion won in October, marking a price drop of about 120 million won in one month. Nearby, the 84.49㎡ unit at Jayeon & Hillstate was traded at 1.47 billion won on the 30th of last month, down 90 million won from 1.56 billion won three months ago.

A representative from B Real Estate Agency in Osan-dong, Hwaseong City, said, "Unlike the first half of this year when demand was strong, recently there has been a transaction cliff, causing asking prices to fall," adding, "While there are many listings for quick sales, demand is low, so transactions are not happening frequently."

Song Seunghyun, CEO of Urban and Economy, explained, "Second-phase new towns like Gwanggyo, Dongtan, and Wirye benefited from the balloon effect due to the rapid rise in Seoul housing prices, but recently, loan regulations have been applied equally to Seoul, reducing their appeal," adding, "Considering that even these areas, which led price increases, are now seeing declining transactions, the downward trend could spread to major areas."

◆ Gangnam Area Also Wobbles... Gangdong-gu Housing Prices Turn Negative = Cases of apartment sale prices turning downward are emerging in Seoul as well. After Eunpyeong-gu, Gangdong-gu, one of the four Gangnam districts, has also shown a decline in average housing prices.

According to Real Estate R114, as of the 24th, the average apartment sale price change rate in Gangdong-gu fell by 0.02% compared to the previous week, turning negative. Until last month, it maintained a level of 0.13% to 0.15%, but this month it slowed to 0.09% (3rd) → 0.04% (10th), eventually turning downward. This is the first time in 1 year and 7 months since May 22 of last year (-0.01%) that Gangdong-gu’s sale price change rate has declined. It is also the first time since May 29 of last year that any area in Seoul has shown a negative change rate based on sale prices.

Earlier, the Korea Real Estate Board announced that apartment sale prices in Eunpyeong-gu turned negative at -0.03% in the third week of December, marking a decline after 1 year and 7 months. Although the survey agencies differ, the emergence of areas like Eunpyeong-gu and Gangdong-gu in Seoul with declining average apartment prices suggests that the housing price decline, which began in the outskirts of Seoul, is spreading to core areas.

The atmosphere is confirmed by actual transactions as well. According to the Ministry of Land’s real transaction price disclosure system, Gangdong-gu had a total of 7 apartment transactions over 60㎡ this month, with 3 of them being at lower prices. The 74㎡ unit at Godeok Gracium in Godeok-dong, which has about 5,000 households, was traded at 1.53 billion won on the 21st, nearly 100 million won lower than the previous transaction in mid-October (1.625 billion won). In Amsa-dong, the 85㎡ unit at Hangang Hyundai dropped about 70 million won from 1.23 billion won in August to 1.16 billion won on the 18th.

This trend is likely to expand to other districts in Seoul. According to Real Estate R114, as of the 24th, apartment prices in three districts?Seodaemun-gu, Seongbuk-gu, and Jung-gu?have stopped rising at 0%.

Ye Kyunghee, senior researcher at Real Estate R114, said, "Currently, with loan regulations and interest rate hikes suppressing buying demand, most homeowners are adjusting the timing of putting their homes on the market, so only truly urgent sales are happening," adding, "In this situation, transactions in relatively large complexes with many households are emerging, and whether these complexes rise or fall is leading the housing price trends in those areas."

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