7 Billion Won Drop in a Month... New Apartments in Gangnam Also on the Decline

Gangnam Area Newly Built Under 5 Years Records -0.02% Compared to Jeonju
Eunpyeong District Declines for 5 Consecutive Weeks, Seongbuk, Nowon, Geumcheon Districts Down for 2 Weeks
Gangnam Older Buildings Rise 0.02%... Market Polarization Expected to Deepen

The prices of newly built apartments in the Gangnam area, which had been driving the rise in Seoul housing prices, have turned downward for the first time in 1 year and 2 months. Despite the recent nationwide slowdown in housing prices, even the new apartments in Gangnam, which had been continuously setting record highs on their own, have seen price drops, and with Eunpyeong District declining for 5 consecutive weeks and Seongbuk, Nowon, and Geumcheon Districts falling for 2 consecutive weeks, the downward trend in Seoul apartment prices appears to be spreading.

According to the weekly apartment price trend for the third week of January announced by the Korea Real Estate Board on the 21st, the price index change rate for newly built apartments less than 5 years old in the Gangnam area recorded -0.02% compared to the previous week. During the same period, apartments in Gangnam over 20 years old maintained an upward trend, while prices of new apartments showed the opposite trend by falling. This marks the first time in about 1 year and 2 months since November 2, 2020 (-0.01%) that prices of newly built apartments less than 5 years old in Gangnam have turned downward.

In fact, according to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system, an 84.64㎡ unit on the 13th floor of The H Xi Gaepo apartment in Irwon-dong, Gangnam-gu, which began occupancy at the end of July last year, was traded for 2.4 billion KRW on the 22nd of last month. A month earlier, similar-sized units of 84.73?84.94㎡ were traded at 2.9 to 3.1 billion KRW, marking a drop of 700 million KRW in the highest price. The H Xi Gaepo is a large complex with units ranging from 81 to 226㎡ and a total of 1,996 households, considered one of the most luxurious apartments in Seoul.

Also, the price of an 84.94㎡ unit at Raemian Leaders One in Seocho-gu fell by 400 million KRW from 3 billion KRW (12th floor) on August 30 to 2.6 billion KRW (19th floor) in December, just four months later. This is a large newly built complex with 1,317 households, reconstructed from Seocho Woosung 1st, completed in September 2020.

Looking at Seoul as a whole, prices of newly built apartments fell by 0.01% this week, continuing the decline for two consecutive weeks following last week's -0.01%. By region, prices of newly built apartments in the southwest area, including Eunpyeong, Seodaemun, and Mapo Districts, fell by 0.01%, marking a negative trend for 4 consecutive weeks, while prices in the southwest area, including Yangcheon, Gangseo, Guro, Geumcheon, Yeongdeungpo, and Dongjak Districts, dropped by 0.02%. The southeast area, comprising Seocho, Gangnam, Songpa, and Gangdong Districts, also fell by 0.01% for two consecutive weeks.

On the other hand, older apartments in Gangnam over 20 years old recorded a 0.02% increase this week. Although the rise was smaller than last week's 0.03%, the upward trend remains. As a result, the average sale price of all apartments in Gangnam rose by 0.02% during the same period. This is interpreted as the continued rise in aging apartment complexes with reconstruction expectations, influenced by initiatives such as the ‘Shintong Plan’.

Market analysts interpret this as a result of the growing perception that housing prices have peaked, along with the effects of loan regulations, interest rate hikes, and a cautious market sentiment ahead of the March presidential election. Additionally, it is predicted that while the overall rise in Seoul housing prices is slowing, polarization will deepen.

Meanwhile, in Gyeonggi Province, the downward trend in apartment prices in the metropolitan area is spreading, with Suwon, Anyang, and Gunpo joining the ranks of price declines. This is seen as a notable drop in areas where prices had surged last year due to expectations of the installation of stops on the metropolitan wide-area express railway (GTX).