House Price Growth Slows in 18 Seoul Districts... Gangnam Reconstruction Rises

Real Estate R114, This Week's Apartment Price Trends in the Seoul Metropolitan Area

[Asia Economy Reporter Kim Hyemin] Amid a significant decline in buying sentiment due to loan regulations imposed by financial authorities, combined with interest rate hikes and increases in comprehensive real estate taxes, apartment prices in Seoul are slowing down. However, news of the rapid integrated planning for reconstruction under Mayor Oh Se-hoon's administration has led to an increased price rise in Gangnam reconstruction complexes.

According to Real Estate R114 on the 27th, Seoul apartment prices in the fourth week of November rose by 0.08% compared to the previous week, showing a reduced rate of increase from the prior week. Reconstruction apartments rose by 0.1%, while general apartments increased by 0.07%.

In Seoul, areas with many mid-to-low priced apartments and regions with redevelopment project issues led the upward trend. By region, the increases were as follows: Geumcheon (0.21%), Gangnam (0.15%), Gangbuk (0.15%), Gwangjin (0.15%), Gwanak (0.14%), Gangdong (0.13%), and Gangseo (0.12%). In particular, in Gangnam-gu, reconstruction projects such as Apgujeong-dong Shinhyundai and Daechi-dong Hanbo Midomansion Phase 1 saw price increases of about 50 million KRW.

New towns rose by 0.04% compared to the previous week. By region, the increases were Gwanggyo (0.1%), Bundang (0.06%), Pyeongchon (0.06%), and Ilsan (0.05%). Gyeonggi and Incheon also rose by 0.04% compared to the previous week, led by Suwon (0.1%), Uijeongbu (0.1%), and Gimpo (0.09%).

The jeonse (long-term lease) market showed relatively quiet conditions due to reduced demand, but the upward trend continued mainly in areas with good school districts and convenient access to downtown.

Seoul's jeonse prices rose by 0.06% compared to the previous week. The increases by district were Seocho (0.17%), Jongno (0.14%), Gangbuk (0.1%), Dobong (0.09%), and Mapo (0.08%). New towns and Gyeonggi-Incheon each rose by 0.04%.

Senior Researcher Lim Byungcheol stated, "With the upward trend in apartment prices in the metropolitan area slowing down, further interest rate hikes are expected to further dampen buying sentiment. However, rather than an immediate decline, the current level of transaction volume and slowing growth rate are likely to be maintained for some time." This is because concerns over the decrease in housing supply, a key factor driving rapid price increases, have not been resolved.

Senior Researcher Lim added, "Buying demand may move, albeit limitedly, to areas benefiting from transportation network improvements, places where supply scarcity is highlighted, and non-apartment properties with less loan burden. If the wait-and-see trend prolongs, the sales market may stabilize, but some sales demand shifting to the rental market could cause instability in the jeonse market."