'Smart One Home' Trend... Seoul Apartments Over 1.5 Billion Won Account for Over 20% of Sales

Seoul Transactions Over 1.5 Billion Won Account for 20.45%
First Time Surpassing 20% Since 2006
Transactions Over 900 Million Won Also at 54.02%
Reflecting Expectations of Comprehensive Real Estate Tax and Reconstruction Regulation Easing

In the first half of this year, 2 out of every 10 apartments traded in Seoul were priced over 1.5 billion KRW. This is the first time since the disclosure of actual transaction data in 2006 that the proportion has exceeded 20%.

Apartments in the Banpo area of Seoul (Photo by Yonhap News)

On the 30th, Woori Bank's Asset Management Consulting Center analyzed the Seoul apartment sales volume and transaction proportions from the Ministry of Land, Infrastructure and Transport, finding that the proportion of Seoul apartment sales exceeding 1.5 billion KRW in the first half of this year was 20.45%.

The proportion of apartment transactions exceeding 1.5 billion KRW has risen for three consecutive half-years, following 17.24% in the first half of last year and 18.44% in the second half. This represents an increase of 3.21 percentage points compared to the same period last year and 2.01 percentage points compared to the previous half-year.

Looking at the transaction proportions by price range for Seoul apartments in the first half of this year, apartments priced between 900 million KRW and 1.5 billion KRW accounted for the largest share at 33.57%, followed by those priced between 600 million KRW and 900 million KRW at 26.23%, and apartments exceeding 1.5 billion KRW at 20.45%, ranking third.

The proportion of apartment transactions exceeding 900 million KRW surpassed half at 54.02% in the first half of this year. The share of transactions for apartments over 900 million KRW decreased from 40.14% in the second half of 2020 to 33.28% in the second half of 2022, then rose to 45.27% in the first half of last year and 47.77% in the second half. Factors such as deregulation of restricted areas, tax relief, and the implementation of special home mortgage loans influenced this trend.

The increase in high-priced apartment transactions is largely due to more trades occurring in high-value apartment clusters such as the Gangnam 3 districts and areas along the Han River. The proportion of apartment sales exceeding 1.5 billion KRW in the Gangnam 3 districts reached 66.54%. In these areas, 6 out of every 10 apartments sold were priced over 1.5 billion KRW. In Mapo, Yongsan, and Seongdong districts, 1 out of every 3 apartments traded (32.07%) exceeded 1.5 billion KRW.

This is due to a preference for a "single smart home," with demand concentrated in apartments in the Gangnam 3 districts and along the Han River. It also reflects expectations related to the easing of the excess profit recovery system for reconstruction, relaxation of reconstruction safety inspection standards, and reductions in comprehensive real estate tax. The cooling of project financing (PF) loans and rising construction costs have led to sluggish new apartment supply in Seoul, highlighting the scarcity of supply in preferred areas. Recently, there has been an increase in buyers rushing to purchase in anticipation of interest rate cuts and supply decreases.

Ham Young-jin, head of Woori Bank's Real Estate Research Lab, explained, "As of 2024, 26% of apartments in Seoul are over 30 years old, meaning one out of every four apartments is old enough to be eligible for redevelopment projects. We believe that demand will continue to concentrate in areas with greater scarcity of new supply and regions with higher price recovery resilience to prepare for housing market fluctuations."

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