[Asia Economy Reporter Ryu Taemin] "Even with positive news related to reconstruction, it's not enough. Since the entire housing market is in a downturn, it's difficult to make transactions unless it's a quick sale." (Representative of real estate agency A in Daechi-dong, Gangnam-gu, Seoul)
As the housing market transaction freeze continues, the price decline trend is ongoing even in Eunma Apartment, considered a representative reconstruction complex in Gangnam. The atmosphere is one of avoidance even in the auction market, which is not subject to land transaction permit zone regulations, as well as in the sales market. Although the Seoul city maintenance plan passed review for the first time in 19 years last month, raising expectations for reconstruction, house prices fell due to the impact of interest rate hikes, resulting in actual transactions at the lowest prices in two and a half years.
According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system on the 16th, a 76㎡ (exclusive area) unit in 'Eunma Apartment' in Daechi-dong, Gangnam-gu, Seoul, was actually traded for 1.77 billion KRW on the 8th. This is a drop of 220 million KRW just one month after it was sold for 1.99 billion KRW on the 8th of last month, marking a fall below the 2 billion KRW mark for the first time in two years. This price is 860 million KRW lower than the highest price of 2.63 billion KRW in November last year, recording the lowest price in two and a half years since the lowest price of 1.766 billion KRW in May 2020.
Completed in 1979, Eunma Apartment is a large complex with 4,424 households. The reconstruction promotion committee was established in 2003, and it passed the safety inspection in 2010. However, as the project was delayed, after more than 20 years since the establishment of the promotion committee, it received a 'conditional approval' decision from the Seoul City Urban Planning Committee subcommittee in August this year, and the maintenance plan passed the Seoul city threshold on the 19th of last month.
Although the maintenance plan's approval has raised expectations for reconstruction, it seems insufficient to reverse the continuous price decline phase. A representative from real estate agency B in Daechi-dong said, "After passing the main meeting of the Urban Planning Committee last month, inquiries about purchases increased, but the transaction volume did not increase significantly," adding, "Most demand is targeting quick sales at low prices, so regular listings are accumulating." Currently, the asking prices for units of the corresponding size in Eunma Apartment range from the low 1.9 billion KRW to 2.2 billion KRW.
84㎡ Unit Listed in Auction Market for the First Time in 5 Years... No Bidders, Auction Failed
This atmosphere is the same in the court auction market. According to court auction information company Gigi Auction, the 84㎡ unit of Eunma Apartment that went on auction on the 10th failed to find a new owner and was auctioned off. This property, appraised at 2.79 billion KRW, is scheduled to be re-auctioned on the next sale date, the 15th of next month, at a minimum price 20% lower than the initial appraisal price, at 2.232 billion KRW.
Previously, properties in the Gangnam-gu area were popular in the auction market because acquiring properties through auction is not subject to land transaction permit zone regulations. In June, Seoul City approved the original proposal to re-designate the land transaction permit zone in Daechi-dong, extending the effectiveness of the designation by one year.
This trend is appearing across reconstruction complexes in Gangnam-gu. According to Real Estate R114 statistics, the sale prices of reconstruction apartments in Gangnam-gu, Seoul, have declined or remained flat for 16 consecutive weeks, falling by 0.44% during that period. This figure is only 0.16 percentage points different from the overall apartment price change rate in Seoul during the same period (-0.60%). Song Seunghyun, CEO of City and Economy, explained, "Unlike the previous rising market, in the current housing market downturn, reconstruction complexes are not considered attractive products to buyers," adding, "It is also true that the burden of investment has increased due to higher financing costs caused by interest rate hikes."
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