"10 Million KRW per 1㎡ Is Common Talk"…Apartment Price Surge Across Seoul

Near 900 Million KRW for High-End Housing Based on 84㎡
14 Out of 25 Autonomous Districts Applicable... Seongbuk, Seodaemun, and Jongno-gu Also Close

Apartment complexes in downtown Seoul as seen from 63 Square in Yeouido, Seoul
[Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] The phenomenon of high-priced apartments in Seoul is spreading beyond Gangnam, Seocho, and Songpa districts (Gangnam 3 districts) as well as Mapo, Yongsan, and Seongdong districts (Mayongseong) to the entire area. As of January, the number of autonomous districts in Seoul where the average apartment price exceeds 10 million KRW per square meter has surged to 14, compared to 6 districts two years ago.

According to KB Real Estate's monthly housing trend report on the 3rd, the average apartment price per square meter in Dongdaemun-gu and Gangseo-gu in Seoul surpassed 10 million KRW last month. Dongdaemun-gu rose from 9.834 million KRW in December last year to 10.056 million KRW, and Gangseo-gu increased from 9.904 million KRW to 10.086 million KRW. As a result, more than half of Seoul's 25 autonomous districts, 14 (56%), now have average apartment prices exceeding 10 million KRW per square meter.

Back in 2018, only six districts including the Gangnam 3 districts and Mayongseong had average apartment prices exceeding 10 million KRW per square meter. However, from the second half of 2019, as housing prices rose, Gwangjin, Yangcheon, Jung, Dongjak, and Yeongdeungpo districts also surpassed 10 million KRW, and Gangdong-gu joined in March last year.

Exceeding 10 million KRW per square meter means that the average apartment price for the standard national size of 84㎡ (exclusive area) has surpassed 840 million KRW. This is close to the government's high-priced housing benchmark of 900 million KRW. Therefore, the inclusion of Dongdaemun-gu, which has many mid-to-low priced apartments, and Gangseo-gu on the outskirts of Seoul in this group is significant. It indicates that apartments affordable for ordinary citizens are disappearing throughout Seoul. According to Real Estate 114, the proportion of apartments priced over 900 million KRW in Seoul last month was 51.9%. This has sharply increased from 31.2% in 2018, 37.2% in 2019, and 49.6% in 2020.

The normalization and spread of 10 million KRW per square meter prices appear to be the result of mid-to-low priced apartments adjusting their prices amid soaring housing prices in Seoul due to abundant liquidity and concerns over supply shortages. Mid-to-low priced apartments under 900 million KRW face fewer loan restrictions from banks and have lower cost burdens in terms of capital gains tax reductions, brokerage fees, and acquisition tax, leading to high demand. Moreover, purchases by those displaced from the jeonse (long-term lease) market have driven prices up sharply.

The number of autonomous districts with apartment prices exceeding 10 million KRW per square meter is expected to increase soon. Seongbuk-gu (9.941 million KRW), Seodaemun-gu (9.884 million KRW), and Jongno-gu (9.819 million KRW) are strong candidates. Nowon-gu (9.261 million KRW) is also close. Yoon Jihae, chief researcher at Real Estate 114, said, "Following last year, this year as well, buying demand is concentrated on apartments under 900 million KRW with fewer loan restrictions in Seoul and the metropolitan area, so the proportion of high-priced apartments is expected to increase further."