Seoul Apartment Historic Low Transaction Volume... Price Gap Between Gangnam and Gangbuk Real Transactions

Actual Transaction Prices: Decline in Gangbuk, Stable or Rising in Gangnam
Impact of Increased Demand for 'Smart One-Home'
Transaction Volume Also Shows Variations by District

[Asia Economy Reporters Seoyul Hwang and Kangwook Cho] Despite an unprecedented transaction freeze continuing, the real estate market is showing instability, with price discrepancies forming by region. This is interpreted as a situation where the currently applied regulations, interest rates, taxes, and other factors are intertwined with an uncertain future, making it difficult to find a clear direction.

According to a comparative analysis of actual transaction prices in March for Gangnam, Seocho, Gangbuk, and Nowon districts from the Ministry of Land, Infrastructure and Transport's Real Transaction Price Disclosure System, overall, the Gangbuk area saw declining transactions, while Gangnam experienced stable or rising transactions. Notably, 7 out of 8 properties sold in Seocho-gu were transacted at prices higher than the previous actual transaction prices. In Gangnam-gu, 9 out of 19 transactions were upward, with 8 of those setting new record high prices.

On the other hand, Gangbuk-gu had no upward or stable transactions among 5 actual transactions. Nowon-gu had 16 upward transactions out of 34, but only half of those, 8, set new record highs. The number of upward transactions in Nowon-gu mostly reflects slight increases from previously sharply decreased prices. Looking at individual properties, Gaepo Woosung 1st Complex (158.54㎡) in Daechi-dong, Gangnam-gu, was sold for 5.1 billion KRW, significantly higher than the previous transaction price of 3.45 billion KRW. Conversely, Buksan Apartment (75.03㎡) in Sanggye-dong, Nowon-gu, was sold for 420 million KRW, below the previous transaction price of 699 million KRW.

Experts interpret these phenomena as influenced by increased demand for a ‘smart single property’ due to real estate regulations. The psychology is that it is more advantageous to own one valuable property rather than bear the increased taxes from becoming a multi-homeowner. Although the official property prices were announced on the 23rd, the tax relief policies for single-homeowners also indicate that current real estate policies are targeting multi-homeowners. This month, the transaction volume by autonomous districts shows 112 cases in the three Gangnam districts (Gangnam, Seocho, Songpa), while Nowon, Dobong, and Gangbuk districts had only 64 cases. However, many opinions suggest that it is difficult to determine the current market direction due to the extremely low transaction volume.

Professor Daejung Kwon of Myongji University’s Department of Real Estate stated, "Prices in both Gangnam and Gangbuk areas have already risen compared to before," but added, "With growing expectations for easing reconstruction regulations around the presidential election, prices in Gangnam may rise further."

Meanwhile, the volume of apartment sales transactions in Seoul is breaking records for the lowest levels ever. According to the Seoul Real Estate Information Plaza, as of the 29th, the number of apartment sales transactions in Seoul in February was 790. Compared to one year ago (3,841 transactions), this has shrunk to about one-fifth. Considering the reporting deadline is 30 days from the contract date, some transactions may increase, but February’s transaction volume is expected to fall well short of 1,000. Since Seoul began compiling related statistics in 2006, monthly transaction volumes have never fallen below 1,000. The March transaction volume, as of this date, is 479, suggesting the possibility of breaking the lowest record again.