"From Seoul to Gyeonggi, Buy Villas Instead of Apartments"... Seoul Villa Transactions Surpass Apartments for 19 Consecutive Months

High Demand for Villas with Low Financing Burden
448 Apartment Sales in July... 24.9% of 1,794 Villa Sales
Gyeonggi-do Records 2,143 Apartment Transactions, Exceeding Villa Sales

Villa area in Seoul (Photo by Yonhap News)

[Asia Economy Reporter Ryu Taemin] In Seoul, the phenomenon of villa (multi-family and row houses) sales volume surpassing that of apartments has continued for 19 consecutive months. This appears to be because demand has shifted to relatively affordable villas due to the recent sharp rise in apartment prices and increased financial burdens caused by interest rate hikes and stricter loan regulations. There is also a growing number of people purchasing apartments in the Gyeonggi region, where prices are relatively lower, instead of Seoul.

According to the Seoul Real Estate Information Plaza on the 8th, villa sales in June reached 3,243 cases, more than three times the apartment sales (1,076 cases). This marks 19 consecutive months since January last year that villa sales have surpassed apartment sales. Even in July, apartment sales were only 448 cases, accounting for just 24.9% of villa sales (1,794 cases). Considering the 30-day reporting deadline for transactions, the trend of villa sales exceeding apartment sales is unlikely to change.

Until 2020, apartment transactions in Seoul outnumbered those of villas. However, since last year, buyers burdened by the skyrocketing apartment prices in Seoul have started turning their attention to villas, which have relatively lower entry barriers. The increased financial burden due to base interest rate hikes and strengthened loan regulations is also a reason for the rise in villa demand. With consecutive base rate hikes increasing loan interest burdens, villas?less affected by loan restrictions and interest rate increases compared to high-priced Seoul apartments?are gaining popularity among genuine homebuyers aiming to own their own homes.

Fatigue from Rapid House Price Rise Shifts Demand from Seoul to Gyeonggi

On the other hand, as demand for cheaper apartments than those in Seoul grows, apartment transaction volumes in Gyeonggi Province still exceed those of villas. According to the Gyeonggi Real Estate Portal, as of this date, apartment sales last month were 2,143 cases, more than villa sales (2,117 cases). In June, Gyeonggi apartment sales also led with 4,039 cases compared to villas at 3,683 cases.

The atmosphere in the auction market also contrasts between apartments and villas. According to Gigi Auction, a court auction specialist company, last month the bid-to-price ratio for Seoul apartments was 96.3%, only 2.5 percentage points higher than villas at 93.8%. Considering that in June last year, when apartment popularity peaked, the bid-to-price ratio gap between apartments (119.0%) and villas (83.5%) was 35.5 percentage points, the mood has clearly shifted within a year.

Song Seunghyun, CEO of City and Economy, said, "With recent interest rate hikes increasing interest burdens, demand is dispersing from Seoul apartments, which require large loans, to villas or outskirts," and predicted, "This trend is expected to continue for the time being."