Still Supply is the Answer? Gangdong Sees First Jeonse Price Drop This Year Amid Large-Scale Move-Ins

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyemin] The jeonse prices of apartments in Gangdong-gu have recorded a negative growth for the first time this year among the 25 autonomous districts in Seoul.

According to Real Estate 114 on the 8th, last week the jeonse prices of apartments in Gangdong-gu, Seoul, fell by 0.06% compared to the previous week. This is the first time this year that jeonse prices have declined among the 25 autonomous districts in Seoul. Until the first week of February, Gangdong-gu's jeonse price increase rate was as high as 0.24%. However, it dropped to 0.12% afterward and turned negative last week.

The decline in jeonse prices in Gangdong-gu appears to be due to the effect of large-scale new apartment move-ins. Since February, Gangdong-gu has seen the highest number of move-ins in Seoul this year, with 3,700 households. During this period, △Sangil-dong Godeok Xi (1,824 households) △Gangil-dong Gangdong Riverst 8 Complex (946 households) △Sangil-dong Gangdong Lien Park 14 Complex (943 households) began move-ins. Even excluding public rental units, there are over 2,700 households.

With the increase in jeonse listings before and after the new apartment move-ins, the supply-demand imbalance in this area has been significantly alleviated. According to the real estate information company 'Apartment Actual Transaction Price (Asil)', up to about 100 jeonse listings appeared in Gangdong-gu during February.

The increase in supply also lowered the jeonse prices of existing apartments. The 'move-in boom' effect, where a temporary increase in jeonse listings due to large-scale move-ins lowers surrounding jeonse prices, has been proven again this time. According to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system, a 59.35㎡ (exclusive area) unit in Godeok Lotte Castle Bene Luce, which was traded for 800 million KRW in January, was leased for 500 million KRW on the 6th of last month. Godeok Arteon, for the same area, was traded for 750 million KRW in September last year but currently has listings in the 600 million KRW range.

However, since the volume of new move-ins in Seoul is low, the possibility of this jeonse price decline spreading to other districts is low. According to Asil, the remaining scheduled move-in volume for the first half of this year is 4,410 households, which is about 65% less compared to the same period last year (12,484 households).