"Expectations for Redevelopment" Seoul Reconstruction Apartment Prices Rise for 3 Consecutive Months

Apartment prices for reconstruction, which are sensitive to market changes, have been rising for three consecutive months. Expectations for revitalizing redevelopment projects are growing as the government’s announcement of new supply measures approaches.

[Image source=Yonhap News]

According to Real Estate R114 on the 19th, reconstruction apartments have been rising for three consecutive months. As of July, apartment prices in Seoul increased by 0.01%, marking the first rise in 14 months since May last year (0.09%). Among these, reconstruction apartments rose by 0.12% and 0.03% in July and August respectively, while general apartments (July -0.01%, August stable) have yet to break out of the bottom range. However, since September, both reconstruction and general apartments have turned to simultaneous increases, suggesting that the trend is likely to strengthen further.

Typically, reconstruction apartments are often traded for investment purposes rather than for residential use, so during price increases, they tend to rise earlier than general apartments and fall earlier during downturns, showing a leading characteristic.

As the Seoul Metropolitan Government accelerates major redevelopment projects in areas such as Apgujeong, Yeouido, and Mokdong, expectations for urban redevelopment projects are growing with the imminent announcement of new supply measures at the government level.

[Image provided by Real Estate R114]

In particular, recent inflation and rising financial costs have intensified conflicts over construction costs, causing sharp declines in permits and groundbreaking?leading indicators of supply in the Seoul metropolitan area including Seoul. Because of this, Real Estate R114 analyzes that regulatory easing policies in redevelopment projects such as reconstruction are inevitable.

A representative from Real Estate R114 stated, “Since it is difficult to induce active private participation without regulatory easing policies, expectations for revitalizing redevelopment projects through institutional support from the government and local governments will grow stronger among demand groups.”

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