'Humiliation of Gangnam Apartments'... Contract Canceled Even After Losing 300 Million Won, 'Lotto Apartments' Halved in Price

A contract cancellation case occurred last month at Jamsil Jugong Complex 5, the leading reconstruction project in Songpa-gu, Seoul. The photo shows the view of Jamsil Jugong Complex 5.

[Asia Economy reporters Cha Wanyong and Noh Kyungjo] The impact of interest rate hikes and a drought in transactions is now affecting apartments in the core Seoul area of Gangnam. While contract cancellations for ultra-high-priced apartments exceeding 3 billion KRW are increasing, cases of transactions at the initial sale price level of 1.5 billion KRW have even appeared at ‘The H Jae Gaepo,’ which moved in last July.

According to the Ministry of Land, Infrastructure and Transport’s real transaction price disclosure system on the 8th, from August to this day, there have been a total of five contract cancellations for ultra-high-priced apartments over 3 billion KRW in the three Gangnam districts (Gangnam, Seocho, Songpa). Gangnam had three cases, while Seocho and Songpa had one case each. Considering that ultra-high-priced apartment sales often have longer transaction periods due to reasons such as fund preparation, the number of contract cancellations is expected to increase further.

First, in Gangnam-gu, on the 2nd, a contract was canceled for Hanbo Mido Mansion Phase 2, a representative reconstruction complex in Daechi-dong, with an exclusive area of 126.33㎡ (10th floor). The contract was made on June 24 for 3.8 billion KRW.

Earlier, on the 31st of last month, a contract for Posco The, exclusive area 200.9㎡ (14th floor) in Dogok-dong, which was signed on June 14 for 3.95 billion KRW, was canceled. Also, on the 16th of last month, a transaction for Dogok Rexle, 84.99㎡ (15th floor) in Dogok-dong, contracted on July 1 for 3.15 billion KRW, was not completed.

In Seocho, a contract cancellation occurred at Banpo Acro River Park, known as a symbol of ultra-high-priced apartments. The sales contract for 84.97㎡ (12th floor), signed on April 2 for 4.31 billion KRW, was terminated on August 26.

In Songpa, the leading reconstruction complex Jamsil Jugong 5th complex had a contract cancellation on the 9th of last month. The property, 82.51㎡ (14th floor), was contracted on June 24 for 3.185 billion KRW.

It is difficult to ascertain the exact reasons behind these contract withdrawals in the market, but considering the recently sluggish real estate market and listing prices, it is believed that these are likely simple cases of buyers backing out. In fact, in the case of Dogok Rexle, 14 units out of a total of 228 households are currently listed for sale, but no transactions have been completed for several months. The 84.99㎡ unit, which had its contract canceled, is now listed at 3 billion KRW.

A representative from a real estate agency in Dogok-dong said, "It is difficult to say that the canceled contracts are due to the buyers’ personal circumstances," but added, "However, the transaction market in Gangnam has been very sluggish recently, and prices are rapidly declining."

Meanwhile, at ‘The H Jae Gaepo,’ which moved in last July, a direct transaction was made on the 25th of last month at the initial sale price level of 1.5 billion KRW. This is the first transaction in the 1 billion KRW range since the sale right was traded for 1.72117 billion KRW in February 2019.

This price is about 500 million KRW lower than the direct transaction price in January this year (2.08273 billion KRW). The drop is even greater compared to last year. The exclusive 84㎡ unit was directly traded for 2.9 billion KRW in November last year. The sales price involving a real estate agent was 2.95 billion KRW. The highest price (excluding sale rights) was 2.99 billion KRW, traded in August last year. This means a drop of about 1.5 billion KRW in just one year.

Recently, amid loan regulations and successive interest rate hikes, the downward trend in house prices has become clear, with complexes dropping by hundreds of millions of KRW. However, in the case of this transaction at The H Jae Gaepo, the price formed is similar to the initial sale price in numerical terms, effectively eliminating any capital gains.

Real estate agents in the area expect that this transaction was made under the current transaction freeze situation and was a direct deal, suggesting it may have a special purpose or form. They explained that similar quick-sale units of comparable size in the same complex are priced around 2.9 billion KRW, and nearby Raemian Gaepo Luceheim units are listed at 2.6 billion KRW.

The head of real estate agency A in Irwon-dong said, "The jeonse (long-term deposit lease) price at The H Jae Gaepo exceeds 1.5 billion KRW, so the sales price cannot be this low," adding, "Since it was a direct transaction, I cannot be certain, but I suspect it might be a kind of equity transaction."

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