Floor Number and Hangang View Considerations Lead to Price Differences of Thousands to Hundreds of Millions Within the Same Complex
In a Sluggish Market with Few Transactions, Ignoring Characteristics and Simple Price Comparisons Cause Real Transaction Prices to Become Confusing
[Asia Economy Reporter Onyu Lim] Recently, the actual transaction price of Gaepo Woosung 2nd Apartment in Daechi-dong, Gangnam-gu, Seoul, has raised concerns about a sharp price drop in the Gangnam area. The 128㎡ (exclusive area) unit of this apartment changed hands at 2.95 billion KRW, which is 500 million KRW lower than the previous highest price of 3.45 billion KRW. However, experts point out that this is an optical illusion caused by a simple comparison that does not consider the characteristics of the property. It did not take into account that the traded unit was on the first floor.
As housing transactions in Seoul's Gangnam area have sharply declined due to the government's strong regulations, there are criticisms that the actual transaction prices disclosed by the government and Seoul City are rather causing market confusion. When transactions are active, there are many price comparison targets, making it easy to identify abnormal transactions, but during a transaction slump, there is a greater possibility of conveying distorted information.
According to the industry on the 8th, in the case of Gaepo Woosung 2nd, which was traded 500 million KRW lower than the highest price, whether or not it has a view of Yangjaecheon Stream affects the market price. The previous actual transaction price for the same floor and area of this apartment in November last year was 3.2 billion KRW. The actual price drop is thus reduced to 250 million KRW. According to KB Real Estate, the market price for the same area is actually on an upward trend. Currently, the asking price for this apartment is formed between 3.15 billion and 3.4 billion KRW. Compared to 3.0 to 3.2 billion KRW in December last year, the graph is trending upward.
Last month, the Gangnam area saw slight declines in sales prices: Gangnam (-0.20%), Songpa (-0.17%), Seocho-gu (-0.13%). Real estate agencies on the front lines respond that while it is true that housing prices in the three Gangnam districts are weak, it is not a sharp decline as some claim. The optical illusion arises from generalizing low-floor transactions or special transactions in some complexes.
In fact, in Gangnam area apartments, even for the same area, price differences ranging from tens of millions to hundreds of millions of KRW occur depending on floor, building orientation, and floor plan design. According to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system, the 84㎡ Eunma Apartment in Daechi-dong was traded between 2.05 billion and 2.18 billion KRW in February. The lowest-priced unit traded was on the 3rd floor, which was 130 million KRW cheaper than the highest-priced unit on the 8th floor. A representative from a nearby A real estate agency in Daechi-dong said, "The average sale price of Eunma has dropped about 100 million KRW compared to December last year or January this year, but the price difference between high floors in the royal building and low floors in less popular buildings can be up to 130 million KRW," adding, "You should not judge market prices solely based on actual transaction records."
In the case of apartments along the Han River, the price difference is even greater due to the added factor of views. For example, the highest asking price for a 107㎡ unit in Sinbanpo 2nd Apartment in Jamwon-dong, Seocho-gu, is 2.85 billion KRW. This is a high-floor unit in a royal building with a Han River view. On the other hand, low-floor units without a Han River view are priced around 2.3 billion KRW. The difference in view accounts for a price gap of over 500 million KRW.
The same applies to Shinhyundai (Hyundai 9, 11, 12th complexes) in Apgujeong-dong, Gangnam-gu. For a 182㎡ unit, high-floor units along the Han River are listed at 4.7 billion KRW, while first-floor units are priced at 4.0 billion KRW. A representative from B real estate agency in this area said, "In this area, even for the same building and floor area, the price difference can be up to hundreds of millions of KRW depending on how well the Han River view is visible rather than the orientation."
There have also been cases where official property prices were adjusted due to view issues. For example, the 170㎡ unit in Galleria Foret, Seongsu-dong, Seongdong-gu, had its official price revised by the Korea Appraisal Board after accepting owners' objections based on floor-specific views.
Professor Kwon Dae-jung of Myongji University Graduate School of Real Estate said, "As overall economic income rises, apartment quality is leveling up, but views and environmental rights remain highly scarce values," adding, "The value of homes with Han River views will continue to rise."
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