Top 50 'Daejang Apartments' Prices Also Plummet... Largest Decline Ever Recorded

October 'KB Seondo Apartment 50' Index Falls 1.75% from Previous Month
More Than Twice the Decline of Seoul Apartment Prices

Apartment view in Seoul area (Photo by Asia Economy DB)

[Asia Economy Reporter Ryu Taemin] The so-called ‘blue-chip’ apartment prices have fallen by the largest margin ever. Due to interest rate hikes and economic downturns freezing the housing market, and the fact that ultra-high-end apartments in the Gangnam area are no longer considered safe assets, there are increasing cases where prices have dropped by hundreds of millions of won compared to their peak prices.

According to the monthly housing trend report released by KB Kookmin Bank on the 24th, the ‘KB Leading Apartment 50’ index for October fell by 1.75% compared to the previous month. This index recorded -0.24% in July, marking the start of a decline, and the drop has increased sevenfold in three months, falling a total of 3.83% over four months. This is the largest decline since the index began compilation in December 2008, nearly 13 years and 10 months ago. In particular, compared to the 0.67% drop in apartment sale prices in Seoul this month, the decline in blue-chip apartments is more than twice as large.

The KB Leading Apartment index selects the top 50 apartment complexes nationwide by market capitalization and shows the rate of change in market capitalization. It is highly sensitive to price fluctuations and leads the nationwide apartment market prices, so it is mainly used as a leading indicator to forecast the housing market. This month, major complexes in the Gangnam area such as Acro River Park, Eunma, and Jamsil Jugong 5th Complex were included in large numbers.

This steep decline is due to the slowdown in the Gangnam area, where high-priced apartments are concentrated. According to the weekly apartment price trend survey by the Korea Real Estate Board, the apartment sale price change rate in Songpa-gu has been negative for 22 consecutive weeks since the third week of May, falling by 2.35%. In Gangnam-gu, the decline has continued for 16 consecutive weeks, Seocho-gu for 10 weeks, and Gangdong-gu for 19 weeks.

Declining transactions have occurred in various places. According to the Ministry of Land, Infrastructure and Transport’s real transaction price disclosure system on the same day, an 84.8㎡ (exclusive area) unit in Jamsil Els, Jamsil-dong, Songpa-gu, changed hands for 1.95 billion won on the 7th, dropping 720 million won from the peak price of 2.67 billion won in March. The 84㎡ Arteon in Godeok-dong, Gangdong-gu, saw its transaction price fall by 500 million won from the peak of 1.98 billion won in April to 1.48 billion won in August.

Song Seunghyun, CEO of City and Economy, said, “With interest rates rising consecutively, even the ‘smart one house’ in Gangnam is no longer considered a safe asset,” adding, “Funds that had flooded into the real estate market during the low-interest period are moving out to other assets such as savings and deposits, showing a ‘reverse money move.’”

Yoon Sumin, a real estate specialist at NH Nonghyup Bank, explained, “Leading apartments tend to reflect price changes quickly because they are concentrated in large complexes with many transactions,” and added, “Especially in the Songpa and Gangdong areas, prices are falling significantly.”

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