"Who Would Buy Here With So Many Better Options?" Over 100 Million Won Jump as Record-High Prices Continue

In the apartment sales market in the outskirts of Seoul, which has been experiencing an acute shortage of jeonse rental listings, record-high transaction prices are occurring one after another. As tenants are unable to find suitable jeonse properties, many are turning to the relatively affordable low-priced apartment sales market, which requires less additional funds, thereby driving up prices.

According to analysis by The Asia Business Daily, which reviewed actual transaction cases of apartments in Seoul reported to KB Real Estate from March 7 to April 5 (based on reporting date), there were a total of 1,496 record-high transactions during this period.

Of these, 1,207 transactions-accounting for 80.7%-were for small and medium-sized apartments with an exclusive area of 85 square meters or less. Additionally, 995 transactions, or 66.5%, were for apartments priced at 1.5 billion won or less, which is the threshold for loans of up to 600 million won. In other words, two out of three record-high transactions involved mid- to low-priced homes.

While strong government regulations have led to significant price drops for high-priced apartments in the Gangnam area, in the outskirts, prices for low-cost, small- and medium-sized apartments-which had previously been left out of home price increases-are recovering rapidly, setting new record highs one after another.

원본보기 아이콘

Among the 25 districts, Gangseo-gu recorded the highest number of record-high transactions. Within this period, there were a total of 142 record-high transactions in Gangseo-gu.

Gangseo-gu also saw the highest number of first-time home purchases in Seoul during February and March. According to the Court Registration Information Plaza, out of 12,248 buyers who applied for ownership transfer registration for their first real estate purchase (based on apartment buildings) in Seoul during this period (as of April 3), Gangseo-gu accounted for 928-the largest share.

Noeun-gu followed with 816, and Songpa-gu, which has many apartments, ranked third with 755, making it the only district among the three Gangnam districts to rank high. Seongbuk-gu came in fourth with 724, and Guro-gu was fifth with 700.

In fact, 126 out of the 142 record-high transactions in Gangseo-gu-representing 89%-were for apartments priced at 1.5 billion won or less. The share of small and medium-sized apartments with an exclusive area of 85 square meters or less was also 89%. Of these, 51 transactions were for small apartments of 60 square meters or less.

The areas with the most record-high transactions closely align with regions where home price increases have been most noticeable. Representative examples include Yeongdeungpo (113 transactions), Seodaemun (72), Dongdaemun (70), Yangcheon (70), Guro (60), and Seongbuk (58).

In Jungnang-gu, all 25 record-high transactions were for apartments priced at or below 1.5 billion won, and in Eunpyeong-gu, only 2 out of 45 transactions exceeded this price. Similarly, in Guro-gu, 58 out of 60 transactions were for apartments priced at or below 1.5 billion won.

Of particular note are Songpa-gu and Gangdong-gu, collectively known as the "four Gangnam districts." Gangdong-gu saw 140 record-high transactions, and Songpa-gu 133, ranking second and third after Gangseo-gu. While both districts are known for their large concentrations of apartments, this is unusual given the recent downward trend in home prices in the greater Gangnam area.

원본보기 아이콘

However, a closer look at the detailed statistics for these areas shows that the recent trend of transactions is still largely concentrated on mid- to low-priced properties. In Gangdong-gu, 91 out of 140 record-high transactions-or 65%-were for apartments priced at or under 1.5 billion won. In Songpa-gu, half of the 133 transactions-66 cases-were at or below this threshold.

According to local real estate agencies, an increasing number of practical buyers are seeking affordable homes in the Gangnam area, prioritizing price over name recognition of the complexes, which has driven up the prices of previously unpopular apartments that had not received much attention.

Significantly, a large portion of record-high transactions involve apartments with relatively low recognition even within their respective regions. Frontline real estate agencies note that this trend is closely related to the worsening jeonse shortage, particularly in the outskirts.

For example, the 59-square-meter Taeyoung Songhwa apartment in Yeomchang-dong, Gangseo-gu, was traded at 800 million won in January but set a new record by being sold for 900 million won last month-an increase of 100 million won in just over two months. Built in 1999, this small complex of 277 units has seen 24 ownership changes since February last year, reflecting a steep upward trend in prices.

The 60-square-meter Geumgang Sumokwon apartment in Oryu-dong, Guro-gu, was sold for 830 million won last month, setting a new record in five years and six months since the previous high of 769 million won in September 2021.

The 47-square-meter Solbat Noblean apartment in Ssangmun-dong, Dobong-gu, had no transactions since July 2020 (312 million won) but set a new record in February this year, after five years and seven months, by being sold for 410 million won. This single-building apartment has 81 units, and for this size, there had been no transactions since July 2020.

An agent at a real estate office in Hwagok-dong, Gangseo-gu, said, "A significant number of buyers of mid- to low-priced apartments are in their 30s and 40s. As it has become difficult to find jeonse listings, more people are searching for apartments that are relatively inexpensive and require less additional cash, rather than competing for popular properties."

An official from a private research institute commented, "The recent sharp rise in home prices in the outskirts also reflects tenants' anxiety about being pushed out to the suburbs. To alleviate this, the government's planned expansion of housing supply needs to proceed quickly."

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.