From Record Highs to Declining Transactions in the Same Complex... Gangnam Apartment Market Shows 'Mixed Trends'

Daegang Apartment and Large Units Continue to Set Record Highs
Mid- and Small-Sized Units Experience Multi-Billion Won Price Drops Amid Fatigue

Apartment buildings in the Seoul area (Photo by Yonhap News)

[Asia Economy Reporter Ryu Tae-min] The real estate market in the three Gangnam districts of Seoul?Gangnam, Seocho, and Songpa?which had been the epicenter of rising housing prices, is showing mixed trends. While government loan regulations and increased comprehensive real estate tax burdens on multi-homeowners have highlighted a preference for owning a single, well-located property, accumulated fatigue from the rapid price increases has led to both record-high prices and declining transactions occurring simultaneously.

According to the weekly apartment price trends for the second week of this month (as of the 10th) released by the Korea Real Estate Board on the 19th, the apartment price increase rate in Seocho-gu, Seoul, was recorded at 0.04%. This is a 0.03 percentage point decrease from the previous week (0.07%). Gangnam-gu saw a 0.03% increase, down 0.02 percentage points from the previous week, while Songpa-gu maintained a steady rate of 0.03%, the same as the previous week, indicating a near-stagnant trend.

Simultaneous Occurrence of Record Highs and Declining Transactions Depending on Size Preference

Several complexes in these areas are setting new record prices. According to the Ministry of Land, Infrastructure and Transport’s real transaction disclosure system, on December 18 last year, a 160.28㎡ (exclusive area) unit in Hyundai 2nd Complex, Apgujeong-dong, Gangnam-gu, Seoul, was sold for 6.02 billion KRW. This price is 220 million KRW higher than the previous highest price of 5.8 billion KRW recorded in September for the same unit size. Similarly, a 194.5㎡ unit in Banpo Xi, Banpo-dong, Seocho-gu, was sold for 5.4 billion KRW on December 22 last year, rising 400 million KRW from the previous highest price of 5 billion KRW in September.

On the other hand, transactions with prices several hundred million to billions of KRW lower than previous deals have also been observed. An 84.93㎡ unit in Raemian Prestige, Banpo-dong, Seocho-gu, which had surged to 3.8 billion KRW in October last year, was sold for 3.44 billion KRW on November 24, dropping by 360 million KRW. Likewise, a 59.9㎡ unit in Lake Palace, Jamsil-dong, Songpa-gu, decreased from 2.01 billion KRW in October to 1.84 billion KRW in December last year.

There are even complexes where record-high and declining transactions occur simultaneously within the same complex. A 124㎡ unit in Resentz, Jamsil-dong, Songpa-gu, changed hands for 3.5 billion KRW in December last year, jumping 450 million KRW from the previous highest price of 3.05 billion KRW in April. However, an 84.9㎡ unit in the same complex was sold for 2.5 billion KRW on the 2nd of this month, dropping over 100 million KRW from the previous highest price of 2.62 billion KRW in October.

This mixed trend appears to be due to differing preferences based on location and unit size. A representative from a real estate agency in Jamsil-dong said, “Although buyers are burdened by the significant price increases so far, the preference for a single, well-located large apartment remains strong. On the other hand, demand for medium and small-sized complexes has relatively decreased, leading to an accumulation of listings and transactions at lower prices.”