Seoul and Regional Apartment Prices Show a 1 Billion Won Gap... Polarization Deepens Over 5 Years

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[Asia Economy Reporter Kangwook Cho] Five years after the launch of the Moon Jae-in administration, the price gap in sales prices between medium-sized apartments in Seoul and provincial areas has reached 1 billion KRW. The apartment price gap more than doubled from the 400 million KRW range at the beginning of the current administration.

According to an analysis of KB Real Estate statistics by real estate information provider Economy Man Lab on the 13th, the average sales price of medium-sized apartments in Seoul in March this year was 1.61059 billion KRW, more than doubling from 803.26 million KRW in May 2017. In six metropolitan cities including Busan, Daegu, Daejeon, Ulsan, Gwangju, and Incheon, prices rose from 336.08 million KRW to 604.41 million KRW during the same period. The price gap between medium-sized apartments in Seoul and these six metropolitan cities expanded from 467.18 million KRW to 1.0618 billion KRW.

While apartment prices in the six metropolitan cities rose slowly, prices in Seoul surged sharply, widening the price gap.

The regional price increase trend is also confirmed in actual transaction prices. According to the Ministry of Land, Infrastructure and Transport’s actual transaction price statistics system, a 99.79㎡ apartment in ‘Mokryeon Town’ located in Irwon-dong, Gangnam-gu, Seoul, was traded for 1.16 billion KRW (11th floor) on May 8, 2017, but on March 30 this year, it was sold for 2.53 billion KRW (5th floor), rising 1.37 billion KRW since the Moon administration began.

Looking at major metropolitan city housing prices, a 101.82㎡ apartment in ‘Doosan’ in Galsan-dong, Bupyeong-gu, Incheon, also rose 222 million KRW from 360 million KRW (12th floor) to 580 million KRW (13th floor) during the same period.

A 101.92㎡ apartment in ‘Triple City’ in Sangdae-dong, Yuseong-gu, Daejeon, sold for 497 million KRW (9th floor) in May 2017 and 934 million KRW (14th floor) in March this year, rising 437 million KRW. A 96.42㎡ apartment in ‘Guseo-dong Lotte Castle Gold Complex 1’ in Guseo-dong, Geumjeong-gu, Busan, sold for 491 million KRW (6th floor) in May 2017 and 802.5 million KRW (16th floor) in March this year, rising 311.5 million KRW.

A 101.86㎡ apartment in ‘Wolseong Prugio’ in Wolseong-dong, Dalseo-gu, Daegu, rose 265 million KRW from 435 million KRW (15th floor) to 700 million KRW (26th floor), and a 101.97㎡ apartment in ‘Unamsan I-Park’ in Unam-dong, Buk-gu, Gwangju, rose from 412 million KRW (12th floor) to 615 million KRW (8th floor).

The average jeonse (long-term lease) price gap for medium-sized apartments between Seoul and the six metropolitan cities was 212.89 million KRW in May 2017 but expanded to 433.54 million KRW in March this year.

Hwang Hansol, a research fellow at Economy Man Lab, said, "Due to the government's successive regulations, preference for a single solid property in Seoul has increased," adding, "The price gap between regions as well as polarization in the subscription market between Seoul and some provincial areas is expected to deepen further."