Record-High Apartment Transactions in Seoul Decline... Proportion Drops in Yongsan and Mapo Districts [Real Estate AtoZ]

Apartment complex in Seoul. Photo by Yonhap News

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Last month, the proportion of record-high transactions in Seoul apartment sales showed a slight decrease. A record-high transaction refers to a deal where an apartment with the same floor plan is sold at a higher price than the previous contract.

Even after the inauguration of the new administration last year, the proportion of record-high transactions continued to rise, which drove up housing prices. However, last month, as President Lee Jaemyung took the lead and announced upcoming real estate measures, the trend appears to be cooling down. In areas that had previously led the increase in housing prices, listings have increased and the market has shifted in favor of buyers, leading the market to expect that record-high transactions will continue to decline.

According to an analysis conducted on March 4 by Zigbang, a real estate platform, using data from the Ministry of Land, Infrastructure, and Transport's actual transaction price disclosure system, the proportion of record-high transactions among Seoul apartment deals last month was calculated at 31.8%. Out of a total of 2,774 transactions, 882 were record-high deals. The proportion of record-high transactions in Seoul apartments rose from 27.7% in December last year to 32.8% in January this year, but fell by 1.0 percentage point last month.

Last year, the proportion of record-high transactions in Seoul apartments showed an overall upward trend. Despite various regulations such as loan restrictions and transaction limits, concerns about supply shortages persisted, resulting in a seller's market. In the second half of last year, the figure remained in the upper 20% range every month, and exceeded 30% at the start of the new year. However, the market sentiment shifted after the additional capital gains tax for multiple homeowners was confirmed and President Lee continued to make strong statements about real estate investment and speculation.

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By region, the decline in the proportion of record-high transactions in Yongsan-gu stands out. The figure rose to 64.1% in January, but dropped by 4.8 percentage points to 59.3% last month. The largest decline was recorded in Jung-gu, falling from 50.0% in January to 31.8% in February. In Mapo-gu, the ratio dropped from 57.9% to 54.0%, and in Dongjak-gu, it fell from 59.6% to 54.0%.

The proportion remains high in the three Gangnam districts. In Songpa-gu, the figure increased from 52.0% in January to 59.0% last month. In Gangnam-gu, it rose from 57.7% to 60.3%. However, Seocho-gu showed a different trend, with the rate of increase being limited despite the continued upward movement. After recording 61.3% in December last year, the figure increased by 8.7 percentage points to 70.0% in January. However, it only rose by 0.7 percentage points last month, reaching 70.7%.

Considering that transactions must be reported within 30 days of the contract, these figures may change. Although record-high transactions continue in the three Gangnam districts and elsewhere, the prevailing outlook is that the proportion will decrease going forward. This is because the government has announced a variety of policy measures in addition to the additional capital gains tax set to take effect in May.

Experts predict that the decrease in the proportion of record-high transactions will be particularly significant in the three Gangnam districts. This is because, due to the lending regulations, only a very limited number of wealthy cash holders can participate. Weekly apartment price change rates in the three Gangnam districts have turned negative, and the increase in the highest transaction prices in Seocho-gu apartments has significantly slowed, making this trend a reality.

Yoon Sumin, a real estate specialist at NH Nonghyup Bank, said, "In January, even expensive listings saw sellers dominating the market because buyers were in a hurry, but since February, the market has shifted to favor buyers, so there is no choice but for the number of record-high transactions to decrease." He added, "In the three Gangnam districts and elsewhere, actual asking prices have fallen significantly and tax burdens have increased, so we expect the decline to be pronounced particularly for expensive listings in these areas."

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