[2020 National Audit] 66% Increase in Small and Medium Apartments in Seoul Over 3 Years

[Asia Economy Reporter Yoo In-ho] Over the past three years under the current administration, prices of small and medium-sized apartments ranging from 40 to less than 62.8㎡, accessible to ordinary citizens and young adults in Seoul, have risen at the highest rate.

On the 21st, Kim Sang-hoon, a member of the National Assembly Land, Infrastructure and Transport Committee from the People Power Party, analyzed the “Average Apartment Sale Price Status by Size in Seoul from May 2017 to July 2020” by the Korea Real Estate Board. According to the analysis, the market price of small and medium-sized apartments with an exclusive area of 40 to 62.8㎡ was 372.18 million KRW in May 2017, the month President Moon Jae-in took office, but as of July 2020, it rose sharply by 65.9% (245.23 million KRW) to 617.41 million KRW.

The price of small apartments under 19 pyeong also increased by 34% (88.92 million KRW) during the same period, from 261.17 million KRW to 350.09 million KRW. Low-priced small and medium-sized apartments that are far from subway stations and old in age were mainly located in outer areas of Seoul such as Nowon-gu and Guro-gu. Even so, house prices have risen over the past three years, making it difficult for ordinary citizens and young adults with limited funds to purchase their own homes.

In Nowon-gu, during the same period, the market price of medium-sized apartments rose by 52.8% (143.25 million KRW) from 271.10 million KRW to 414.35 million KRW, while small apartments increased by 53.6% (100.56 million KRW) from 187.59 million KRW to 288.15 million KRW. The price increase for small apartments was higher than that for medium-sized ones. In Guro-gu as well, small apartments rose more at 51.0% compared to 49.9% for medium-sized apartments.

On the other hand, in areas with many high-priced houses such as Gangnam-gu and Seocho-gu, the largest increase was seen in medium-sized apartments and above.

The amount of price increase grew as the apartment size increased. During the same period, large apartments over 135㎡ had the lowest price increase rate at 38.0%, but the average increase amount was the highest at 549.78 million KRW. This was followed by large-medium apartments at 412.68 million KRW (56.7%) and medium-sized apartments at 316.73 million KRW (61.5%).

The price increase of top-tier small and medium-sized apartments was even greater. For example, a small 38.671㎡ apartment in Hyundai Hillstate 2nd Complex in Gangnam-gu was already expensive at 775 million KRW three years ago, but it has now risen by 410 million KRW to 1.185 billion KRW, surpassing 1 billion KRW in market price. Similarly, a medium-sized 59.89㎡ apartment in Raemian Prestige in Seocho-gu surged by 815 million KRW to 2.115 billion KRW, reaching the 2 billion KRW range.

Assemblyman Kim said, “Over the past three years, ordinary citizens’ affordable homes in Seoul have disappeared,” adding, “The government’s real estate mismanagement has rather stimulated gap investment and panic buying, sharply increasing housing costs for ordinary people. A revision of the overall direction of the current housing policy is necessary.”