House Prices Are Said to Fall, but 20-Pyeong Units Reach 3 Billion Won... Housing Market Polarization Accelerates

Multi-Homeowners' 'Smart Single Property'... Record Price Relay
Banpo Raemian Prestige 59㎡ Sold for 3 Billion KRW
Severe Transaction Freeze in Mid-Low Price Dense Areas in First Half

On the 26th, the city apartments viewed from 'Seoul Sky,' the observation deck of Lotte World Tower in Songpa-gu, Seoul

As the real estate market faces an extreme transaction freeze, the polarization between high-priced and low-priced housing is becoming even more pronounced.

Due to regulatory policies targeting multi-homeowners, such as the comprehensive real estate tax and increased capital gains tax, investors have shifted to a 'smart single home' strategy. Loan regulations seem to impact the mid- to low-priced housing market more severely than the Gangnam area, which the government has targeted for housing price stabilization.

According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system on the 30th, a 59㎡ (exclusive area) unit in Raemian Prestige, Banpo-dong, Seocho-gu, Seoul, was traded at 3 billion KRW. The 59㎡ size is generally known as an 'entry-level unit,' preferred by newlyweds and first-time homebuyers. This is the first time that an apartment of this size has entered the 3 billion KRW price range.

Despite growing voices that the real estate market has reached a turning point and the government’s repeated warnings about peak prices, demand for high-priced homes, especially in the Gangnam 3 districts, remains relatively resilient.

According to the monthly apartment sales transaction status from the Korea Real Estate Board, the number of transactions in Gangnam-gu in October was 314, a 6.3% decrease from 335 at the beginning of the year. In contrast, Nowon-gu, which has many mid- to low-priced properties, saw a sharp drop from 632 to 194 transactions during the same period, a 69.3% plunge. Loan regulations have made it difficult for those with limited cash flow to purchase homes, naturally leading to a transaction freeze.

Price trends also show a clear divide. On the 15th of last month, an 84㎡ unit in Acro River Park, Banpo-dong, Seocho-gu, was traded at 4.5 billion KRW, a new record price 300 million KRW higher than the previous high of 4.2 billion KRW. Similarly, an apartment of the same size in Eunma Apartment, Daechi-dong, Gangnam-gu, was traded at a record high of 2.82 billion KRW on the 15th of last month.

On the other hand, on the 2nd of this month, a 46.8㎡ unit in Byeoksan Apartment, Sanggye-dong, Nowon-gu, was traded at 500 million KRW, which is 77.5 million KRW lower than the 577.5 million KRW price in September. On the 12th of last month, a 58.01㎡ unit in Sanggye Jugong Complex 4 was traded at 747 million KRW, about 60 million KRW lower than the previous peak of 815 million KRW in July.

The polarization between high-priced and low-priced housing is intensifying due to the transaction freeze. According to the monthly housing market trend time series statistics from KB Kookmin Bank, the nationwide apartment 5th quintile ratio was 9.5 for sales and 7.5 for jeonse (lease), both the highest monthly figures since the survey began in December 2008. The 5th quintile ratio is an indicator showing the price gap between high-priced and low-priced homes. It is calculated by dividing the average price of the 5th quintile (top 20%) by the average price of the 1st quintile (bottom 20%) when housing prices are divided into five groups. A 5th quintile ratio of 9.5 means that apartments in the 5th quintile are 9.5 times more expensive than those in the 1st quintile.

In December, the average price of 5th quintile apartments nationwide was 1.18975 billion KRW, up 1.9% from the previous month. Meanwhile, 1st quintile apartments fell 0.7%, from 125.75 million KRW to 124.91 million KRW. The polarization gap is even more severe in the provinces. The 5th quintile ratio for apartment sales in Seoul was 4.2 in December, up 0.1 from the previous month, while the five major metropolitan cities in the provinces (Busan, Daegu, Gwangju, Ulsan, Daejeon) and other provinces recorded their highest figures since the survey began, at 5.7 and 6.7 respectively.