Popularity of 'Sodangi' and 'Jeoga' Apartments... Leading the Sales Market

'Under 300 Households' Small Complex Apartment Sales Share Hits All-Time High This Year
Demand for Small Complex Apartments ↑, Supply ↓
'Under 600 Million Won' Low-Priced Apartment Sales Volume Also Rising... Expected to Continue for a While

The volume of sales transactions for small-scale apartments with fewer than 300 households has reached an all-time high this year.
[Image source=Yonhap News]

[Asia Economy Intern Reporter Kim Se-eun] It has been confirmed that the demand for sales of small-scale apartment complexes has significantly increased this year.

According to Real Estate R114 as of the 22nd, out of 55,704 apartment sales nationwide in the first quarter of this year, transactions of small complexes with fewer than 300 households accounted for 23.5% (13,106 cases).

The proportion of sales of small complex apartments fell to 16.8% in 2020 but rose to 20.1% last year, and in the first quarter of this year, it reached an all-time high of 23.5%.

On the other hand, the sales proportion of large complexes with more than 1,500 households dropped to a single digit for the first time this year, at 9.4% (as of the 22nd).

This is attributed to an increase in transactions of low-priced apartments amid signs of recovery in apartment listings that had been stagnant around the presidential election.

Following that, complexes with 300?499 households recorded 20.4%, 700?999 households 19.0%, 500?699 households 15.3%, and 1,000?1,499 households 12.3%.

Yeokyunghee, Senior Researcher at Real Estate R114, explained, "Small-scale complexes generally have lower residential preference compared to large complexes, so their sales prices tend to be cheaper."

Meanwhile, while demand for small-scale complexes is increasing, supply is decreasing, leading to rising prices.

The proportion of households in apartments with fewer than 300 households nationwide decreased continuously for 15 years, from 22.9% in 2006 to 18.1% last year. The first quarter of this year recorded an even lower 18.0%.

However, the sales price per 3.3㎡ (pyeong) has continued to rise, surpassing 10 million KRW in 2015 at 14 million KRW, and reaching 18.62 million KRW in the first quarter of this year.

On the 18th, the Uam Senseview Apartment in Geumodong, Uijeongbu-si, Gyeonggi-do, consisting of 2 buildings and 202 households, recorded a new highest price for the same area with a 15th-floor unit of 87.794㎡ sold for 310 million KRW.

The proportion of low-priced apartment sales under 600 million KRW is also on the rise.

Although sales increased after the presidential election due to expectations of regulatory easing, it is analyzed that loan regulations and interest rate hikes have had an impact.

In fact, among the total 1,383 apartment transactions reported in Seoul from the presidential election to the 22nd of this month, transactions of apartments priced under 600 million KRW accounted for 39.6% (547 cases).

This is a 5.7 percentage point increase compared to the 33.9% share of transactions under 600 million KRW during the same period last year.

On the other hand, the transaction share of apartments priced between 900 million KRW and 1.5 billion KRW, which are subject to loan-to-value (LTV) restrictions, decreased slightly from 23.0% to 22.8% during the same period.

The share of apartments priced over 1.5 billion KRW, which are not eligible for mortgage loans, saw the largest decrease from 16.3% to 14.7%.

Senior Researcher Ye said, "After the presidential election, low-priced apartments under 600 million KRW, which are eligible for the government-backed mortgage loan 'Bogeumjari Loan' for low-income households, are leading the sales market," and predicted that this trend will continue for the time being.

She added, "Although the next government pledged to ease loan regulations to help real demand buyers purchase homes, the recent trend of rising base interest rates makes it difficult to expect a 'significant easing' of regulations," explaining the reason.