Seoul Villa Market's 'Momtech' Craze... Surpasses Apartment Transactions for 9 Consecutive Months

As Apartment Prices Soar, People Turn to Affordable Villas... Redevelopment Activation Policies Also Play a Role
2030s with Low Subscription Scores Opt for Established Villas for Both Residence and Investment
Villa Boom Pushes Median Sale Prices to Apartment Levels from Four Years Ago

View of a villa neighborhood from a building in Yangcheon-gu, Seoul. / Photo by Moon Honam munonam@

[Asia Economy Reporter Lim On-yu] The craze for villas (townhouses and multi-family houses) in Seoul continues, with sales transactions soaring to twice the volume of apartments. This is the result of an increase in real demanders seeking alternatives amid soaring apartment prices, along with expanded investment demand driven by proactive redevelopment policies from the Seoul Metropolitan Government and the central government. In particular, the 2030 generation, who often lack sufficient financial capacity, are engaging in so-called 'Mom-tech,' a strategy combining actual residence and investment. 'Mom-tech' is a newly coined term referring to a financial strategy where residents endure inconveniences by living in old houses while aiming for redevelopment or reconstruction.

According to the Seoul Real Estate Information Plaza on the 29th, the number of villa sales transactions in September has been tallied at 1,888 so far. This is twice the volume of apartment sales transactions, which stand at 944. Since the housing transaction reporting date is within 30 days from the contract date, the number of sales in September is expected to rise further. However, as both villa and apartment transactions are compared based on the same time frame, the trend is unlikely to change.

Typically, apartment sales volumes have been 2 to 3 times higher than villa sales volumes on a monthly basis. However, this year, an unusual reversal in transaction volumes has been observed for nine consecutive months from January to September.

Experts attribute this reversal to the urgent demand for home ownership triggered by the sharp rise in apartment prices and even rental prices, prompting buyers to hasten purchases of relatively affordable villas. The Seoul Metropolitan Government and the central government's policies to revitalize redevelopment are also identified as major factors attracting investment demand to the villa market.

Especially among the 2030 generation with low subscription scores, some are actively investing in early redevelopment zones in Seoul instead of waiting for the 3rd New Town subscription in Gyeonggi Province and Incheon. They are willing to endure living in old houses for the time being to complete 'Mom-tech' with the aim of moving into newly built apartments after redevelopment.

A view of a villa neighborhood in Yangcheon-gu, Seoul. / Photo by Mun Ho-nam munonam@

Along with the surge in villa demand, actual transaction prices are also rising sharply. According to the real estate platform Dabang, the median sales price per 3.3㎡ of villas in Seoul reached 20.38 million KRW in July. The median sales price per 3.3㎡ of Seoul villas was in the 18 million KRW range in March and April, similar to the end of 2019. However, from May, it soared to 19.6 million KRW per 3.3㎡ and surpassed 20 million KRW per 3.3㎡ within two months. Considering that the median sales price of Seoul apartments was 20.07 million KRW per 3.3㎡ in February 2017, villa prices have risen to levels comparable to apartments from four years ago.

Kim Hyo-sun, Senior Real Estate Advisor at NH Nonghyup Bank, explained, "The recent sharp rise in Seoul villa prices and the upward trend in mid-to-low priced apartments in the metropolitan area can be interpreted as a combined result of expanding purchase demand for villas as substitutes for Seoul apartments and metropolitan area apartments, along with expectations for redevelopment in prime locations such as Yongsan and Songpa, driven by the government's public redevelopment and Seoul's active promotion of urban renewal projects."

However, concerns have been raised about various side effects, such as threats to housing stability for low-income residents and instability in the monthly rent market due to the villa market boom.

Kim advised, "Redevelopment projects involve many variables related to policies and stakeholders during the project phase, making it difficult to guarantee project duration and profitability. There are often panic buying and speculative purchases hoping for rapid redevelopment, but indiscriminate purchases not based on residence should be approached with caution."

He added, "Purchasing villas with expectations of redevelopment means buying houses that will soon be demolished, which can lead to increased demand in the monthly rent market. Therefore, urgent alternatives are needed to stabilize the supply and prices of rental housing in the metropolitan area."