Seoul Apartment Buying Sentiment Rises for 6 Consecutive Weeks... Increased Focus on 'Smart One-Unit'

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[Asia Economy Reporter Jo Gang-wook] The sentiment for purchasing apartments in Seoul has been rising for six consecutive weeks, continuing its recovery trend. The rebound signs are most prominent in the Gangnam area. In particular, as prices for medium to large apartments have risen simultaneously, the phenomenon of demand concentrating on key areas and complexes, known as the ‘smart single property’ trend, is intensifying.

According to the Korea Real Estate Board on the 15th, the Seoul apartment sales supply-demand index for the second week of April (as of the 11th) was 91.0. This is an increase of 0.3 points compared to the previous week. The supply-demand index quantifies the ratio of buyers to sellers; a value above 100 indicates demand exceeds supply, while below 100 means the opposite. The higher the number, the greater the demand. The Seoul apartment sales supply-demand index hit a low of 86.8 at the end of February and has been rising for six weeks. Although sellers still outnumber buyers, this is interpreted as a recovery in buying sentiment.

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The southeastern area, which includes the three Gangnam districts of Gangnam, Seocho, and Songpa, had the highest sales supply-demand index at 96.5, up 0.5 points from last week’s 96.0. The southeastern area had experienced a severe transaction drought starting late last year, with the index bottoming out at 85.2 at the end of February this year, but has since risen to a level where buyers and sellers are nearly balanced. This is attributed to growing expectations of benefits from the new government’s housing policies, such as easing reconstruction regulations and reducing housing taxes after the presidential election. The southwestern area, which includes Mokdong and Yeouido?areas with many reconstruction projects?also rose from 90.6 to 91.0. The northeastern area, which includes Nowon, Dobong, and Gangbuk districts (known as Nodo-gang), increased slightly from 88.1 to 88.4. The northwestern area, including Eunpyeong, Seodaemun, and Mapo districts, also saw a slight rise from 88.9 to 89.0. However, the central area, including Yongsan, Jongno, and Jung districts, was the only one among Seoul’s five regions to decline, dropping 0.5 points from 89.6 to 89.1. This is interpreted as a result of diminished expectations for price increases except in Yongsan, where development hopes have grown due to the presidential office relocation.

Looking at this week’s apartment price change rates in Seoul, Gangnam-gu (0.04%) and Seocho-gu (0.02%) in the southeastern area, and Yongsan-gu (0.03%) in the central area rose compared to the previous week. In the southwestern area, only Yangcheon-gu (0.02%) increased, making a total of four districts out of 25 autonomous districts showing an upward trend. Particularly by size, across Seoul, apartments with exclusive areas of 85㎡ or more all rose, indicating a preference for medium to large apartments over smaller ones. This is accelerating the so-called ‘smart single property’ concentration phenomenon. In fact, the sales price change rate for apartments in Seoul with exclusive areas over 85㎡ and up to 102㎡ expanded from 0.02% last week to 0.03% this week. Apartments over 102㎡ and up to 135㎡ rose from flat last week to 0.02% this week. Apartments over 135㎡ also showed a 0.01% change rate, continuing their upward trend for three consecutive weeks. On the other hand, apartments 40㎡ or smaller remained flat, and those between 40㎡ and 60㎡ decreased by -0.01%.

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