"Is This Just the Beginning?"...Once-Soaring Apartment Prices in the Three Gangnam Districts and Yongsan Turn Down After Two Years

Statistics show that apartment prices in the three Gangnam districts of Seoul and in Yongsan District fell compared with a week earlier. These areas led the rise in housing prices in Seoul last year, and this is the first time in about two years that they have turned downward simultaneously in the weekly data. Despite stringent loan regulations and transaction restrictions last year, they had consistently remained on an upward trend, but as market conditions surrounding multiple-home owners have turned unfavorable, the upward trend has halted and signs of a downturn are emerging.

According to the weekly apartment price trend data released by the Korea Real Estate Board on the 26th, apartment sale prices in Seoul in the fourth week of this month (as of the 23rd) rose 0.11% from a week earlier. After the growth rate hit 0.31% in late January, it has been shrinking each week this month, to 0.27% in the first week of February, 0.22% in the second week, and 0.15% in the third week.

While the pace of increase has slowed across Seoul overall, what stands out is that apartment prices in the three Gangnam districts and Yongsan District have actually turned to a decline. Prices in Gangnam District fell 0.06%, Seocho District 0.02%, and Songpa District 0.03%. Yongsan District recorded a 0.01% decrease. This is the first time since the first week of February 2024 (the 5th) that all four districts have posted negative figures together.

Listings for apartment sales labeled "urgent sale" and "super-urgent sale" are displayed at a real estate agency in Gangnam District, Seoul. Yonhap News Agency

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In Gangnam District, prices fell notably in Daechi-dong and Cheongdam-dong, while in Songpa District the decline was pronounced in Bangi-dong and Sincheon-dong. In Yongsan District, prices mainly dropped for older apartment complexes in Hannam-dong and Ichon-dong. The Korea Real Estate Board stated, "There is a mixed trend by area and complex, with some complexes seeing transactions concluded at reduced prices," adding, "Seoul as a whole still rose because demand continues to concentrate on large, highly preferred complexes and those near subway stations."

The three Gangnam districts and Yongsan District are cited as the areas that led the rise in Seoul housing prices last year. Based on the Korea Real Estate Board’s data, the overall apartment price increase rate in Seoul last year was about 8.71%. By district, Songpa District rose 20.92%, the highest among the 25 autonomous districts. Gangnam District (13.59%), Seocho District (14.11%), and Yongsan District (13.21%) also exceeded the average. Amid persistent concerns over supply shortages in recent years, the lifting and re-designation of land transaction permit zones last year, combined with various regulatory measures that exacerbated supply-demand instability, pushed housing prices higher.

Recently, the mood has shifted. President Lee Jaemyung has pledged to restore the heavier capital gains tax on multiple-home owners under the banner of "normalizing the real estate market," and has been sending repeated messages that loan benefits will also be withdrawn. The market expects that once the heavier capital gains tax on multiple-home owners actually takes effect from May, tax burdens will surge, prompting some owners to seek to sell in advance, even at reduced prices.

View of densely packed apartment complexes in downtown Seoul from Namsan. Photo by Yonhap News

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On top of this, the government has formalized a revamp of holding taxes, so even if properties are not sold, the tax burden on multiple-home owners is likely to increase. Although the authorities have not yet presented detailed plans for the tax overhaul, a broad direction has been set to lower transaction taxes (acquisition tax) while raising holding taxes (property tax and comprehensive real estate holding tax). Tax benefits for long-term holdings by non-residents are also expected to be reduced.

In Seoul, apart from districts such as Eunpyeong, Yangcheon, and Geumcheon, every area saw its week-on-week rate of increase slow. Gwacheon continued to decline, falling again this week (-0.10%) after a drop last week, with the pace of decline widening. Jeonse rental prices are relatively stable. The growth rate of apartment jeonse prices in Seoul this week was 0.08%, the same level as a week earlier.

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