Only 90,000 Households in Seoul... Apartments Under 600 Million Won Have Disappeared

88% Decrease in Number of Households Over 5 Years
Plummeting to 7.5% of Total Supply
Over 900 Million Won Non-Owner Occupied Units Increase to 68%

Surge in Demand Due to Loan Regulations Amid Soaring House Prices
Yoon Administration's Loan Easing Focuses on Under 600 Million Won... Share Expected to Decline Further

[Asia Economy Reporter Kim Hyemin] Apartments priced below 600 million KRW in Seoul are rapidly disappearing. Over the past five years, the number of such units has decreased by more than 88%, shrinking to about 7% of the total supply. This is attributed to the sharp rise in Seoul housing prices and the concentration of demand on mid-to-low priced apartments with less stringent loan regulations, indicating that apartments affordable for ordinary citizens are diminishing accordingly.

According to the distribution status of Seoul apartments by price range received from Real Estate R114 on the 7th, as of the 27th of last month, there were 92,013 apartments priced below 600 million KRW, falling below 100,000 units. This accounts for about 7.59% of the total 1,212,897 apartments surveyed.

The proportion of apartments priced below 600 million KRW used to make up the majority of Seoul apartments at 62.7% just five years ago. As of May 26, 2017, early in the Moon Jae-in administration, there were 787,277 such units. However, by January last year, four years later, this number had shrunk to about one-third, at 259,785 units. Subsequently, it halved again to 145,015 units in September last year, and by May this year, it further decreased by over 4,000 units compared to the beginning of the year, reducing its share even more.

On the other hand, the proportion of apartments priced above 900 million KRW has become the dominant trend, increasing from 18.2% to 67.9% over five years. In terms of volume, it surged nearly threefold from 229,578 units to 823,079 units. Apartments priced between 600 million KRW and 900 million KRW also increased by about 60,000 units, accounting for 24.5% of the total.

The disappearance of apartments priced below 600 million KRW in Seoul appears largely due to the rapid rise in housing prices, which has pushed up the average price level. Additionally, buying demand has concentrated on apartments below 600 million KRW, where funds can be relatively easily procured by avoiding strict loan regulations, driving prices up. The 600 million KRW mark is the highest threshold for receiving the low-interest housing mortgage loan called Bogeumjari Loan, targeted at ordinary citizens. In fact, as of the end of last year, 4 out of 10 apartment sales contracts in Seoul were for apartments priced below 600 million KRW.

Apartments priced below 600 million KRW are expected to shrink further. This is because the eased loan regulations for first-time homebuyers starting next month are mostly designed to benefit properties priced below 600 million KRW.

The 50-year maturity Bogeumjari Loan, introduced to increase loan limits for youth and newlyweds and reduce monthly interest burdens, applies only to homes priced below 600 million KRW. The policy to raise the loan-to-value ratio (LTV) up to 80% for first-time homebuyers applies to homes priced up to 900 million KRW, but since the loan limit is capped at 400 million KRW, most benefits will likely go to properties priced below 600 million KRW.

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