Last Year, One in Four Apartment Sales Transactions in Seoul Were for Units '40㎡ or Smaller'

Increasing Housing Price Burden and Impact of Rising Single-Person Household Ratio

[Asia Economy Reporter Cha Wanyong] Last year, one out of every four real estate sales transactions in Seoul involved small apartments with an exclusive area of 40㎡ or less. This is attributed to the increased burden of housing prices due to rising interest rates and pre-sale prices, as well as the growing proportion of single-person households.

According to the Korea Real Estate Board on the 5th, the proportion of apartment sales transactions in Seoul for units 40㎡ or smaller accounted for about 25% of the total last year. This is the highest since related statistics began in 2006. It is an increase of about 12 percentage points compared to 13% in 2021.

A view of downtown apartments from Namsan, Seoul. [Image source=Yonhap News]

The increase in sales transactions of small apartments is analyzed to be largely influenced by the soaring burden of housing prices. According to the Housing and Urban Guarantee Corporation (HUG)'s 'Private Apartment Pre-sale Price Trends,' the average pre-sale price of apartments in Seoul in January was 30.631 million KRW per 3.3㎡, up 2.86% from the previous month (29.779 million KRW). The pre-sale price per 3.3㎡ exceeding 30 million KRW rose for the first time in nine months since April last year (32.24 million KRW).

There are also forecasts that demand for small apartments in the Seoul housing market will increase further due to the rapid rise in single-person households. According to the '2022 Administrative Safety Statistical Yearbook' published by the Ministry of the Interior and Safety last year, single-person households among registered residents in Seoul totaled 1,906,690 households, accounting for 43.08% of the total.

As the demand base for small apartments grows, sales prices are also showing an upward trend. A 39㎡ unit in Helio City located in Songpa-gu was traded for 950 million KRW in January this year, recording an increase of more than double compared to the pre-sale price range of 460.2 million to 478.7 million KRW.

Jeonse and monthly rental transactions are also actively taking place. According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system, the turnover rate of jeonse and monthly rentals for a 27㎡ small apartment in Jamsil Rescence, which offers convenient access to the Gangnam area, is 40%, higher than the overall complex turnover rate of 21%.