Polarization of Apartment Prices... Gangnam-Gangbuk Gap Doubles in 5 Years

[Asia Economy Reporter Kim Hyemin] The gap between low-priced and high-priced apartment prices nationwide has widened to an all-time high, and polarization within the same region is also intensifying.

On the 26th, Economic Man Lab, a real estate information provider, analyzed the monthly housing price trends from KB Kookmin Bank Live Real Estate and found that the price gap between apartments in the Gangnam area and Gangbuk area of Seoul nearly doubled over five years. The Gangnam area refers to 14 autonomous districts south of the Han River, while the Gangbuk area refers to 11 autonomous districts north of the Han River. The average apartment sale price in the Gangnam area in January this year was 1,499.28 million KRW. In contrast, the Gangbuk area recorded 998.19 million KRW, showing a difference of about 510.9 million KRW.

Back in May 2017, when the current government took office, the average apartment sale prices in Gangnam and Gangbuk were 733.47 million KRW and 458.64 million KRW respectively, a difference of 274.83 million KRW. However, the gap continued to widen to 330.5 million KRW in 2018 (January), 377.17 million KRW in 2019, 406.74 million KRW in 2020, 430.22 million KRW in 2021, and expanded to 500 million KRW this year.

Not only sale prices but also jeonse (long-term lease) prices are showing an expanding gap. In May 2017, the average jeonse prices for apartments in Gangnam and Gangbuk were 490.22 million KRW and 350.98 million KRW respectively, a difference of about 139.24 million KRW. However, in January this year, they were 777.8 million KRW and 551.91 million KRW respectively, increasing the gap to 225.89 million KRW.

Hwang Hansol, a research fellow at Economic Man Lab, explained, "Recently, mid- to low-priced apartments have been directly hit by loan regulations and interest rate hikes," adding, "The area north of the Han River, which has relatively more mid- to low-priced apartments, is experiencing a trend of price decline or stagnation."