Seoul Apartments, Smaller Units Drop More in Price

Relative Low-Priced Young Buyers Driving Demand

Buying Frenzy Ends Amid Interest Rate Hikes

Only 4,150 Purchases by 2040 Generation This Year

[Asia Economy Reporter Kim Min-young] This year, the sale prices of small apartments (under 40㎡) in Seoul have fallen more than those of larger and medium-sized apartments. This is attributed to the sharp decline in demand for small apartments, which had attracted a large number of '2030 Young Buyers' due to their relatively affordable prices, following the impact of interest rate hikes.

According to KB Real Estate's 'Monthly Apartment Sale Price Index by Exclusive Area' on the 12th, the sale price index for small apartments (under 40㎡) in Seoul in September was 99.5, down 0.46% from the previous month.

In September, the sale price index for Seoul apartments declined across all size categories: large (-0.04%), medium-large (-0.10%), medium (-0.21%), medium-small (-0.23%), with the largest drop seen in small apartments. The apartment sale price index by exclusive area is categorized as large (135㎡ and above), medium-large (95㎡ to under 135㎡), medium (62.8㎡ to under 95.9㎡), medium-small (40㎡ to under 62.8㎡), and small.

Looking at the weekly apartment trend by size from the Korea Real Estate Agency as of the 3rd, the largest declines in sale price index were for small apartments under 40㎡ (-0.25%) and medium-small apartments over 40㎡ up to 60㎡ (-0.27%).

Expanding the comparison period from January to September this year, the decline in small apartment prices becomes more pronounced. The change rates in apartment sale price index by exclusive area from January to September were: large (2.32%), medium-large (0.82%), medium (0.34%), medium-small (-0.04%), and small (-0.48%), with only medium-small and small categories recording negative growth.

Small apartments have been popular among younger generations with lower income and limited funds, as their prices are cheaper than other size categories.

However, since the end of last year, as interest rates began to rise, the buying spree by the 20s and 30s generations has halted, leading to a disappearance of demand for small apartments and resulting in price declines.

The cooling of apartment purchase enthusiasm among the 20s and 30s generations is also confirmed by the number of apartment purchases in Seoul. According to the Korea Real Estate Agency, from January to August this year, the number of apartment purchases by the 20s and 30s generations in Seoul was 4,150, accounting for 35.0% of total transactions (11,996). This is the lowest level since related statistics began to be released in 2019 (30.4%). The same period last year saw a share of 41.8%.

Park Won-gap, Senior Real Estate Specialist at KB Kookmin Bank WM Star Advisory Group, said, "Small apartments were mainly purchased by the MZ generation (Millennials + Generation Z) with limited financial capacity. Due to the impact of interest rate hikes, young generations are refraining from buying apartments, causing small apartment prices to fall more than other sizes."

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