Jamsil and Daechi Housing Prices Rebound... Is the Gangnam Adjustment Period Over?

Jamsil Jugong 5 82.51㎡ Hits Highest Price This Year
Daechi Eunma Also Recovering... May Average Actual Transaction Price Reaches 1.8 Billion KRW Range
As Capital Gains Tax Suspension Ends, Quick Sales Deplete and Trading Volume Increases
However, Some Viewpoint Says It's Too Early to Judge Recovery Due to Economic Uncertainty

[Asia Economy Reporter Lim On-yu] The prices of Songpa-gu Jamsil-dong Jugong Complex 5, a symbol of mid-rise reconstruction in the Gangnam area of Seoul, and Eonma Apartment in Daechi-dong, Gangnam-gu, are on the rise. Some housing types in Jamsil Jugong Complex 5 were traded at the highest prices this year this month. As transactions of properties listed to avoid holding tax have ended, there is speculation that the adjustment phase in the Gangnam area transaction market may be coming to an end.

According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system on the 4th, an 82.51㎡ unit in Jamsil Jugong Complex 5 was traded for 2.261 billion KRW on the 1st. This is the highest actual transaction price this year. This apartment recorded a new high of 2.43 billion KRW in December last year but saw a sharp price drop due to the government's strong real estate regulations such as the December 16 measures. In April this year, the actual transaction price even fell to the 1.9 billion KRW range. A representative from real estate agency A in the area said, "Recently, it has become difficult to find listings below 2 billion KRW for units around 82㎡," adding, "Although price fluctuations are large, it seems that expectations that prices will eventually rise are reflected."

Eonma Apartment in Daechi-dong also entered an upward trajectory when a 76㎡ unit was traded for 1.85 billion KRW on the 23rd of last month. The average actual transaction price of this apartment, which was 1.785 billion KRW in April, rose by 46 million KRW to 1.831 billion KRW last month. The number of transactions also increased significantly from 3 to 9. Considering that the reporting period for actual transactions is one month, the transaction volume is likely to increase.

New apartments in the Gangnam area are also setting record prices. The Raemian Daechi Palace 91㎡ in Daechi-dong, Gangnam-gu, which had almost no transactions this year, was sold for 3 billion KRW, breaking its highest price record, and a 73㎡ unit in Jugong Complex 6 in Gaepo-dong was traded at this year's highest price of 1.75 billion KRW.

The change in the atmosphere of Gangnam apartments is also detected in price trends from various institutions. According to the Korea Real Estate Board, the price change rate for the last week of last month in the four Gangnam districts (Gangnam, Seocho, Songpa, and Gangdong) was -0.07%, a smaller decline compared to the previous week (-0.10%). Songpa-gu reduced its decline from -0.07% to -0.04%, and Gangnam-gu from -0.13% to -0.08%. According to statistics from the private company Real Estate 114, apartment prices in Songpa-gu even rose by 0.02% during this period.

In the market, there is also a forecast that the base interest rate being lowered to a historic low of 0.5%, along with the continuous rise in jeonse (long-term deposit lease) prices recently, could stimulate buyers' purchasing sentiment. As of the 25th of last month, the weekly national apartment jeonse price index recorded 96.18, marking 39 consecutive weeks (10 months) of increase since the first week of September last year (93.79).

However, experts say it is too early to judge these movements as a full-fledged price recovery. There is a possibility of more last-minute tax-saving listings ahead of the capital gains tax surcharge exemption for multi-homeowners ending at the end of this month, and the overall economic outlook remains uncertain. Lim Byung-chul, chief researcher at Real Estate 114, said, "Prices rose as urgent sale transactions continued mainly in the Gangnam area," adding, "However, since the COVID-19 pandemic is still ongoing, concerns about further declines remain."