Metropolitan Area Apartment Price Increase Rate Hits Another Record High... How Far Will the GTX Effect Go?

Korea Real Estate Board Apartment Price Trends for 3rd Week of June
Largest Increase in Seoul Metropolitan Area Since May 2012
GTX Boost Pushes Anyang Dongan-gu Close to 1% Rise
Rising Rent Prices in Seoul Metropolitan Area Also Increase... Up 0.2%

Sale notice posted at a real estate office in Apgujeong-dong, Gangnam-gu, Seoul [Image source=Yonhap News]

[Asia Economy Reporter Moon Jiwon] The apartment price increase rate in the Seoul metropolitan area has broken its all-time high again after just one week. Apartment prices are soaring mainly in key areas of Gyeonggi Province benefiting from the Seoul Metropolitan Express Railroad (GTX), while in Seoul, the prices of many reconstruction complexes have also risen significantly, further intensifying the confusion in the real estate market.

According to the weekly apartment price trend for the third week of June announced by the Korea Real Estate Board on the 24th, as of the 21st, apartment prices in the metropolitan area rose by 0.35%, expanding the increase from the previous week (0.34%). Last week, the metropolitan area’s increase rate expanded by 0.03 percentage points, marking the highest level since the related statistics began to be published in May 2012. After one week, the increase rate grew by another 0.01 percentage points, setting a new record again.

Apartment prices in Seoul rose by 0.12%, the same as the previous week. The Real Estate Board explained, "The upward trend continued as buying demand flowed into mid-to-low price areas with transportation or development benefits and some reconstruction-centered areas." In Seoul, Nowon-gu (0.25%) saw the largest increase, with record-high transactions continuing mainly in older buildings in Sanggye-dong, driven by high expectations for eased reconstruction regulations.

Prices also rose in Mapo-gu (0.15%) and Dobong-gu (0.14%), mainly in reconstruction-promoting complexes. South of the Han River, Seocho-gu (0.18%), Gangnam (0.17%), and Songpa-gu (0.15%), where major reconstruction complexes are concentrated, showed clear upward trends. Dongjak-gu (0.17%) saw sharp price increases mainly in older buildings in Sindaebang and Sangdo-dong, and Yangcheon-gu (0.12%) experienced steep rises mainly in the Mokdong New Town reconstruction area.

In Incheon, the apartment price increase rate slightly decreased from 0.49% last week to 0.48% this week, but high growth was maintained mainly in Bupyeong-gu (0.58%) and Gyeyang-gu (0.49%). In Gyeonggi Province, the increase rate expanded from 0.43% to 0.44%. With Indeokwon Station effectively selected as an additional GTX-C station, apartment prices in nearby Anyang Dongan-gu (0.95%) surged. Siheung-si (0.95%), Osan-si (0.92%), Pyeongtaek-si (0.88%), and Gunpo-si (0.78%) also continued their upward trends amid various development benefits.

Citizens visiting Namsan in Seoul looking at the Gangnam area of Seoul [Image source=Yonhap News]

The jeonse (long-term lease) market is also becoming increasingly unstable. The jeonse prices of apartments in the metropolitan area rose by 0.20% this week, expanding from 0.18% last week. This is nearly double the increase rate from early April (0.11%). In Seoul (0.11%→0.09%), the increase rate narrowed this week due to short-term surge fatigue, but jeonse prices are rising rapidly due to relocations from redevelopment projects such as Banpo 1, 2, and 4 districts and Noryangjin New Town 6 district.

Seocho-gu (0.36%) saw significant jeonse price increases mainly in Banpo, Jamwon, and Bangbae-dong, and jeonse demand is also growing in Gangnam-gu (0.11%), Songpa-gu (0.15%), and Dongjak-gu (0.19%).

Jeonse price increases also expanded in Incheon (0.35%→0.41%) and Gyeonggi Province (0.18%→0.21%). In Incheon, Yeonsu-gu (0.86%) saw a sharp rise in jeonse prices mainly around Dongchun and Yeonsu-dong station areas and new buildings in Songdo-dong. In Gyeonggi Province, jeonse prices rose notably in Siheung-si (0.64%), Danwon-gu in Ansan (0.57%), Dongducheon-si (0.48%), and Anseong-si (0.47%).