Seoul Apartment Prices Stir... Actual Transaction Price Index Fluctuates

[Asia Economy Reporter Kim Min-young] The real estate market ahead of the new government's launch is showing no clear direction. Although the decline in the actual transaction price index in February, which best reflects the market sentiment, widened again, the decline narrowed in March after the presidential election, resulting in a volatile market. Seoul apartment prices remained flat for three consecutive weeks, continuing an upward trend centered on Gangnam and Yongsan, while mid-to-low-priced areas such as Geumcheon-gu and Guro-gu continued to decline.

According to the Korea Real Estate Board on the 23rd, the actual transaction price index for Seoul apartments in February this year fell by 1.02% compared to the previous month. This was the largest decline in 3 years and 1 month since January 2019 (-1.04%). The Seoul apartment actual transaction price index turned negative in November last year (-0.95%), then narrowed from -1.01% in December to -0.71% in January this year, but the decline widened again in February. The preliminary figure for March shows a further narrowing to -0.46%, indicating fluctuations. The actual transaction price index only counts reported transactions, making it the most accurate statistic reflecting market conditions. A Korea Real Estate Board official explained, "The decline in Seoul's actual transaction price index in February was due to economic uncertainties such as interest rate hikes."

However, after the presidential election, with President-elect Yoon Seok-yeol emphasizing deregulation of reconstruction and redevelopment, the market sentiment changed, especially in areas benefiting from these policies. The narrowing of the decline in the March actual transaction price index (preliminary) appears to reflect this sentiment.

According to the Korea Real Estate Board's weekly apartment trend report, Seoul apartment prices stopped declining and turned flat in April. As of the third week of April (18th), Seoul apartment prices remained steady. In particular, areas with ultra-high-end housing and reconstruction complexes showed an upward trend.

In the Gangnam area, Songpa (-0.01%→0.00%) and Gangdong (0.00%→0.00%) remained flat, but Gangnam-gu (0.04%→0.03%) saw record-high transactions mainly in Gaepo-dong, and Seocho-gu (0.02%→0.03%) showed increases centered on large units in Banpo and Seocho-dong, expanding the overall rise rate of the southeastern region, which includes the four Gangnam districts, from 0.01% last week to 0.02%. Yangcheon-gu (0.02%→0.02%) showed an upward trend mainly in the Mok-dong new town area.

In the Gangbuk area, Yongsan-gu (0.03%→0.03%) rose by renewing record-high prices mainly through reconstruction. Nowon-gu (-0.02%→0.00%), which has many complexes past the reconstruction eligibility period, stopped its 14-week continuous decline and turned flat for the first time in 15 weeks since January 3rd (0.03%).

On the other hand, mid-to-low-priced areas such as Seongbuk-gu (-0.01%→-0.02%), Guro-gu (0.00%→-0.01%), and Geumcheon-gu (0.00%→-0.01%) continued to decline, with transactions generally occurring below asking prices.

A Korea Real Estate Board official explained, "While some high-priced areas with medium-to-large units or reconstruction projects saw increases, mid-to-low-priced areas generally remained buyer-favored markets, with transactions mainly involving urgent sales, resulting in Seoul overall showing a flat trend for three consecutive weeks."