Apartment Prices Rise After Landlord's Child Scores Perfect on Suneung Exam

Namyangju Wabu-eup Deokso-ri D Apartment Owner's Child Scores Perfect on CSAT
Parents of Exam-Taking Children Compete, Selling Price Exceeds Asking by 10 Million KRW
Case Proving Education's Impact on South Korea's Real Estate Market
Reports Show Apartment Prices Vary with Seoul National University Admission Rates
Rising Regular Admission Rates Cause Rent Surge in Daechi-dong, Mok-dong, and Others

[Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] Recently, D Apartment in Deokso-ri, Wabu-eup, Namyangju-si, Gyeonggi Province has become a hot topic in the local real estate brokerage industry. This is because news spread that a "perfect score premium" for the College Scholastic Ability Test (CSAT) was attached to the 84㎡ (exclusive area) apartment that was traded earlier this year.

According to real estate agencies in Namyangju on the 13th, the apartment was reportedly contracted at a price about 10 million KRW higher than the amount initially set by the owner. This is unusual considering that transactions generally occur at prices lower than the seller's asking price. It is said that competition among buyers arose after it became known that the seller's child had achieved a perfect score on last year's CSAT. A representative from real estate agency A in the area said, "Even before the government's February 20 real estate measures and before Namyangju housing prices surged, three sets of parents competed to receive the perfect score energy, which led to the premium." He added, "In Deokso, it is possible to apply for the special rural and fishing village admission track when entering university, so parents living in Seoul sometimes move here ahead of their child's middle school entrance."

The frontline real estate brokerage industry unanimously stated that the transaction of Deokso D Apartment is a clear example of the influence education has on the real estate market. Especially recently, as the government decided to reduce the proportion of early admissions in university entrance, demand for school districts is expanding further. According to brokers, demand for rental and lease properties in areas densely populated with prestigious schools or famous academies is increasing.

Earlier, the Korea Institute of Public Finance released a report last month titled "Housing Price Premiums Due to Educational Environment and Neighbor Composition," which pointed out this social phenomenon. According to the report, if the admission rate to Seoul National University from a high school in Seoul increases by 1 percentage point and sustains for over 10 years, the transaction price in that school district rises by 14%. The report explains that half (47.2%) of the housing price difference between the Gangnam 3 districts (Gangnam-gu, Seocho-gu, Songpa-gu) and other areas is determined by ▲Seoul National University admission rates ▲residents' educational levels ▲density of private academies.

Recently, the influence of school district demand is also growing in the jeonse (long-term lease) market. After the government announced last year the abolition of foreign language high schools, international high schools, and autonomous private high schools, and the expansion of regular university admissions, traditional prestigious school district areas such as Daechi-dong in Gangnam-gu and Mok-dong in Yangcheon-gu have seen jeonse prices surge sharply. Looking at the monthly highest jeonse prices from September last year to last month, the 145㎡ unit at Dongbu Centreville in Daechi-dong, Gangnam-gu, Seoul, rose from 1.8 billion KRW to 2.3 billion KRW, an increase of 500 million KRW. The jeonse price for the nearby Raemian Daechi Palace 94㎡ also jumped from 1.5 billion KRW to 1.7 billion KRW. Apartments in the new town area of Mok-dong, Yangcheon-gu, which have high school district demand, also saw jeonse prices soar by about 60 million to 100 million KRW during the same period.

A representative from real estate agency B in Daechi-dong said, "Even if apartments like Eunma Apartment are old and reconstruction is delayed, if the educational environment such as elementary, middle, and high schools or large-scale academies is good, jeonse prices hardly drop," adding, "In South Korea, the education premium has a significant impact on the real estate market, raising prices regardless of the condition of the property."