Falling Actual Transaction Prices of Seoul Apartments... Gaepo Jugong Down by 660 Million KRW

Apgujeong Hyundai 1st Complex 4.478 Billion KRW... 200 Million KRW Drop
Seoul Apartment Prices Stall... Impact of COVID-19 Spread
Attention on Whether Reconstruction Decline Will Extend to Seoul Outskirts

[Image source=Yonhap News]

[Asia Economy Reporter Moon Jiwon] Amid the spread of the novel coronavirus infection (COVID-19), Seoul apartment prices have turned to a downward trend for the first time in about nine months, and the number of listings with sharply falling prices is increasing across Seoul.

According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system on the 5th, on the 2nd, a 196.21㎡ (11th floor, exclusive area) apartment in Hyundai 1st Complex, Apgujeong-dong, Gangnam-gu, Seoul, was traded for 4.4785 billion KRW. Compared to a 14th-floor unit of the same size sold for 4.7 billion KRW in January, the price dropped by more than 200 million KRW.

On the 30th of last month, a 145.83㎡ (4th floor) unit in Dongbu Centreville, Daechi-dong, Gangnam-gu, was sold for 3.19 billion KRW. Although it is on a lower floor, it is 560 million KRW lower than an 8th-floor unit sold for 3.75 billion KRW in January.

The price decline was even more pronounced in Gangnam's reconstruction apartment complexes. A 50.64㎡ unit on the 4th floor of Gaepo Jugong 1st Complex in Gaepo-dong, Gangnam-gu, changed hands for 1.94 billion KRW on the 30th of last month. Since a unit on the same floor was sold for 2.6 billion KRW in February, the price dropped by a staggering 660 million KRW in just one month.

According to the weekly apartment price trend survey by the Korea Real Estate Board, apartment prices in Gangnam-gu have been falling for 11 consecutive weeks since January 20. As of the 30th of last month, prices fell by 0.16% compared to the previous week, indicating that the decline is continuing to deepen. Songpa-gu (-0.12%) and Seocho-gu (-0.17%) also saw price drops mainly in high-priced complexes, increasing the decline.

This is interpreted as the significant impact on reconstruction complexes, which are the first to experience price drops during a real estate downturn. In fact, according to Real Estate 114's weekly apartment market trends, the sale price of reconstruction apartments in Seoul fell by 0.31% compared to the previous week. This is the largest decline in seven years since June 2013.

The downward trend in housing prices that started in Gangnam-gu is spreading to other districts in Seoul. The Shibeom Apartments in Yeouido-dong, Yeongdeungpo-gu, Seoul, a representative reconstruction promotion complex, were traded for 1.48 billion KRW for a 79.24㎡ (9th floor) unit on the 12th of last month. Considering that the last transaction for this size was on December 14 last year at 1.6 billion KRW (11th floor), the price dropped by about 120 million KRW.

Apartment prices are also declining recently in Mapo, Yongsan, and Seongdong districts (collectively known as Ma-Yong-Seong), where prices rose significantly last year. A 75.7㎡ (18th floor) unit in Hanwha Obelisk, Dohwa-dong, Mapo-gu, was traded for 785 million KRW on the 28th of last month. A 30th-floor unit of the same size was sold for 850 million KRW on the 11th of the same month. Recent asking prices are also reported to exceed 800 million KRW.

With the official prices of high-end houses rising sharply this year, increasing the burden of property tax, some owners are listing their properties at somewhat lower prices. According to the Korea Real Estate Board's weekly apartment price survey, as of the 30th of last month, apartment prices in Mapo (-0.02%), Yongsan (-0.01%), and Seongdong (-0.01%) all turned to a downward trend. This is the first price drop since May last year in Mapo-gu, June last year in Yongsan-gu, and July last year in Seongdong-gu.