Heading to Gyeonggi to Find a Home... 'Escape Seoul' Accelerates Amid Soaring Housing Prices

Average Apartment Price in Seoul 1.15 Billion Won
6 out of 10 People Leaving Seoul Move to Gyeonggi

The photo shows apartment complexes in the Songpa and Gangnam areas as seen from the Seoul Sky observation deck at Lotte World Tower in Songpa-gu, Seoul. [Image source=Yonhap News]

[Asia Economy Reporter Heo Midam] As apartment prices in Seoul soar to unprecedented heights, the exodus of actual homebuyers from Seoul continues this year as well. Those leaving Seoul due to high housing prices are turning their attention to relatively affordable areas such as Gyeonggi Province and Incheon. Amid this trend, concerns are rising that the government’s plan to announce improvements to the price ceiling system for pre-sale prices later this month could further intensify the outflow from Seoul.

According to recent data released by the Korea Real Estate Board, as of April, the average sale price of apartments in Seoul was 1.15041 billion KRW. Since surpassing 1 billion KRW for the first time in July last year (1.1093 billion KRW), prices have continued to rise steadily. In contrast, the average sale price of apartments in Gyeonggi Province in April this year was 607.1 million KRW, roughly half the price compared to Seoul.

As a result, many are leaving Seoul and heading to Gyeonggi Province. The reason is that it is more advantageous to own a home in Gyeonggi, where housing prices are relatively lower, than to live in Seoul on monthly rent or lease.

Gu Mo (27), an office worker currently renting a monthly lease in an officetel in Eunpyeong-gu, Seoul, said, "After deducting rent, food expenses, and transportation costs from my salary, there is nothing left." He added, "The burden of housing prices in Seoul is so high that I can’t even think about owning a home. Also, many places in Seoul are expensive despite having small floor areas. In Gyeonggi, I can live in a larger space for the same cost." He continued, "My goal is to own a home in Gyeonggi within this year."

The photo shows a rental notice posted at a real estate agency in downtown Seoul. [Image source=Yonhap News]

More than 60% of those who left Seoul moved their residence to Gyeonggi Province. According to domestic population movement data from Statistics Korea, from May last year to April this year, 530,728 people left Seoul. Among them, 329,468 people, accounting for 62%, moved to Gyeonggi Province.

Consequently, the population of Gyeonggi Province is rapidly increasing. As of the end of last month, the registered population of Gyeonggi Province was 13,581,496, approximately 4,085,000 more than Seoul. At the end of 2010, the population difference between Seoul and Gyeonggi was about 1.47 million, indicating that the gap has widened sharply.

Amid this, there are predictions that the exodus of actual homebuyers from Seoul will accelerate further. The government has announced plans to unveil improvements to the price ceiling system for pre-sale prices this month, raising the likelihood of an increase in Seoul apartment pre-sale prices.

The price ceiling system for pre-sale prices is a policy that limits the pre-sale price to an amount below the sum of land cost, construction cost, and additional costs to stabilize housing prices. The government is reportedly discussing a plan to recognize relocation costs for union members, financial interest on union project funds, business compensation, and eviction lawsuit costs as additional costs. In other words, by including costs that were previously excluded from additional costs, pre-sale prices may rise.

Experts predict that the outflow from Seoul will continue. Professor Kim Taegi of Dankook University’s Department of Economics said, "Citizens are feeling burdened by the high housing prices in Seoul and are leaving the city. Those leaving Seoul mainly turn their eyes to Gyeonggi or Incheon because of good accessibility to Seoul. As accessibility to Seoul improves, the outflow from Seoul will continue," he said.