Daegang Apartment Prices Also Plummet... Largest Drop in Over Two Years

August 'KB Seondo Apartment 50' Index Down 0.72%
Threefold Decline in One Month

[Asia Economy Reporter Kim Hyemin] The sale prices of 50 leading apartment complexes nationwide have fallen at the largest rate in over two years. The negative growth rate has continued for two consecutive months, with the decline widening. In fact, in Seoul's Gangnam area, where many leading apartment complexes are concentrated, there are increasing cases of transactions occurring at prices several hundred million won lower than the peak prices.

According to the monthly housing trend report released by KB Kookmin Bank on the 29th, the 'KB Leading Apartment 50' index for August fell by 0.72% compared to the previous month. This index had recorded -0.24% last month, marking a shift to decline, and the drop this month is three times larger. It is the largest decline in two years and four months since April 2020, when it recorded -0.91%.

This month, nationwide apartment sale prices fell by 0.23% compared to the previous month, and Seoul saw a 0.15% decline. Compared to this, the decline in leading apartments is greater than the overall average.

The Leading Apartment 50 index annually selects the top 50 apartment complexes nationwide by market capitalization (calculated by multiplying the number of households by price) and indexes their rate of change. It shows price fluctuations more sensitively than the overall complexes and leads the nationwide apartment market prices, making it a barometer for predicting the real estate market, according to industry evaluations. It means that the overall real estate market trends can be proactively examined. Major landmark complexes from various regions are included, such as Acro River Park in Seocho-gu, Eunma Apartment in Gangnam-gu, Jamsil Jugong 5 Complex in Songpa-gu, Raemian Sure in Gwacheon, Gyeonggi Province, and Samik Beach in Suyeong-gu, Busan.

However, in reality, transactions at declining prices have been increasing recently in these complexes. A 76㎡ unit in Eunma Apartment, Daechi-dong, Gangnam-gu, was sold last month for 2.4 billion won, more than 200 million won lower than the peak price of 2.635 billion won in November last year. A 134㎡ unit in Dogok Rexle, Dogok-dong, Gangnam-gu, was traded this month for 4.23 billion won, which is 710 million won lower than the peak price of 4.94 billion won in May. Similarly, a 76㎡ unit in Jamsil Jugong 5 Complex, Songpa-gu, fell by 30 million won in one month and was traded last month at 2.725 billion won.

The larger price decline in leading apartments is because these complexes have actual transactions taking place. Park Won-gap, Senior Real Estate Specialist at KB Kookmin Bank, said, "In the current state of transaction disappearance, many cases appear stable due to no transactions, but leading apartments concentrated in large complexes are actually transacting, so prices are being captured more accurately. To understand the current real estate market situation, the Leading Apartment index is more precise."

He added, "Currently, herd behavior is occurring even in the declining market, leading to transaction disappearance and further price drops. Unless there is a signal such as the end of interest rate hikes or prices hitting the bottom, this trend is expected to continue until the first quarter of next year."