Reconstruction, which drove Seoul apartment prices, also sees its rise 'pause'

0% Increase in Sale Prices as of the 15th
Seocho, Songpa, Gangdong Have Not Risen Since Mid-May, Remaining Flat or Falling

Notable Decline Transactions in Nowon-gu
Sangye Jugong 7 Complex Down 200 Million KRW in a Year
Apgujeong Hyundai Apartment Traded 300 Million KRW Lower in a Month

Gangnam Daechi Eunma Apartment. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Kim Hyemin] Cases of actual transaction price declines are increasing in reconstruction apartments that had been holding steady despite the adjustment phase in Seoul housing prices. Not only in Nowon-gu, where the decline has deepened, but also in Gangnam-gu, which had maintained a rising price trend due to steady buying demand, price adjustments have recently begun. This is interpreted as having affected the reconstruction market as real estate transactions sharply decreased.

According to Real Estate R114 on the 18th, as of the 15th, the price increase rate of reconstruction apartments in Seoul recorded a flat trend. The price change rate of apartments undergoing reconstruction was 0.05% as of the 24th of last month. In contrast, the price of general apartments at the same time fell by 0.01% compared to the previous week. However, a week later, it dropped to 0.03%, then maintained the change rate before finally settling at flat this time.

This is because the decline widened in Gangnam-gu, where major reconstruction complexes are concentrated. During the same period, the price change rate of reconstruction complexes in Gangnam-gu fell from 0.17% to ▲0.09%, ▲0.08%, and ▲0.02%. Seocho, Songpa, and Gangdong-gu, classified as the Gangnam 4 districts, have not risen even once since mid-May, fluctuating between flat and decline.

Reconstruction complexes have driven the rise in apartment prices in Seoul so far. Many places saw their value rise just from news of passing the preliminary safety diagnosis, the very early stage of reconstruction. Because of this, they recorded higher growth rates than general apartments without reconstruction issues, but after turning negative for the first time in about a year in March, the trend has fluctuated and the decline has become clear since June.

This is particularly noticeable in Nowon-gu, where the recent housing price decline has been significant. Nowon-gu has been a hotbed of reconstruction efforts centered around Sanggye-dong over the past 2-3 years, but as housing prices cooled rapidly from the outskirts of Seoul, these reconstruction complexes were directly hit.

According to the Ministry of Land, Infrastructure and Transport’s actual transaction price disclosure system, a 79㎡ unit in Sanggye Jugong Complex 7 in Sanggye-dong, Nowon-gu, was traded for 1 billion KRW on the 22nd of last month. Compared to the same size unit traded for 1.2 billion KRW in September last year, it dropped by 200 million KRW in less than a year. A 49.94㎡ unit in the same complex was traded for 800 million KRW on April 30th but dropped by 52 million KRW and changed hands for 748 million KRW on the 4th of last month.

Dobong-gu is not much different. A 66㎡ unit in Changdong Jugong Complex 3 in Changdong was sold for 720 million KRW in May. This is a drop of 175 million KRW in half a year from the previous transaction of 895 million KRW in November last year.

Cases of decline have also started to appear in Gangnam-gu, where Seoul’s representative reconstruction complexes are concentrated. A 157.36㎡ unit in Hyundai Apartment 7th Complex in Apgujeong-dong was contracted for 5.5 billion KRW on the 9th of last month. This is 300 million KRW lower than the record high of 5.8 billion KRW for the same size unit sold in Hyundai 6th Complex the previous month. Since this was a transaction involving a licensed real estate agent rather than a direct deal, it is unlikely to be a special transaction such as a gift between family members. Despite the decline in Seoul housing prices, Gangnam-gu has been breaking record prices due to demand for a ‘smart single home.’

Yoon Jihae, senior researcher at Real Estate R114, said, "Due to the impact of interest rate hikes, the absence of sales transactions across the metropolitan area is limiting price movements," adding, "It is necessary to watch whether the government’s supply plan and deregulation policies to revitalize urban maintenance projects to be announced next month will reverse the mood."

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