"Apgujeong and Jamsil's 500 Million KRW Recovery Is Routine"... Gangnam Housing Prices Rise as Much as They Fall

Songpa-gu Sees Cumulative Price Change Turn Positive This Year
Record Highs and Rebound Trades Surge in Apgujeong, Jamsil
Development Boosts Like Reconstruction Make Suppression Difficult

House prices in the Gangnam area are showing unusual signs. After plummeting like a slide, prices are rapidly recovering and seem poised to fully recoup this year's losses. In particular, in redevelopment complexes such as Apgujeong in Gangnam and Jamsil in Songpa, it has become common for actual transaction prices to rise by more than 500 million KRW compared to the beginning of the year. Despite being designated as land transaction permission zones and subjected to repeated restrictions, house prices are bouncing back.

Apgujeong Hyundai Apartment. Photo by Hyunmin Kim kimhyun81@

According to the Korea Real Estate Board on the 25th, as of the third week of July, the cumulative change rate of apartment prices in Songpa-gu this year was 0.32%, marking the first rebound among the 24 autonomous districts of Seoul. Following Songpa-gu, Seocho-gu is close to reversing its downward trend, currently showing a cumulative change rate of -0.21%. If the upward trend continues, it is expected to turn positive as early as August. Gangnam-gu also shows signs of an imminent rebound with a cumulative change rate of -1.05%.

House prices in the Gangnam area, which had sharply declined due to high interest rates, have been rapidly recovering since the beginning of this year following various loan and tax regulation relaxations. Especially, complexes with increased redevelopment expectations, boosted by government and Seoul city support, are leading the upward trend. Even though Apgujeong and Jamsil areas are again designated as land transaction permission zones, allowing only genuine buyers to purchase, transactions have rebounded beyond recovery to even record-high deals.

In fact, a 144.2㎡ (exclusive area) unit in Hyundai 6th complex in Apgujeong-dong was traded on the 8th for 5.12 billion KRW, setting a new record price. It was sold for 4.3 billion KRW in December last year and recovered to 4.6 billion KRW in May this year, but in July it changed hands at a price 520 million KRW higher. This apartment belongs to the 3rd district, where redevelopment fever is intense following the confirmation of Seoul city's new planning proposal.

Nearby, a 118.6㎡ unit in Miseong 2nd complex was also traded on the 8th at the highest price ever of 3.73 billion KRW. The previous highest price was 3.45 billion KRW in April 2021, and after no transactions for over two years, it was sold at a price 280 million KRW higher.

Jamsil Apartment Complex, Songpa-gu, Seoul

In Jamsil Jugong 5th complex, a representative redevelopment apartment in Songpa, relay rebound transactions are occurring. On the 12th, an 82.61㎡ unit was contracted for 2.92 billion KRW. The actual transaction price, which had fallen to 2.175 billion KRW in January, recovered to the 2.6 billion KRW range in April and 2.8 billion KRW in May, breaking through the 2.9 billion KRW barrier in July. A similarly sized 82.51㎡ unit showed a similar pattern, rising from 2.323 billion KRW in January to 2.996 billion KRW on the 6th, an increase of 673 million KRW in six months. A representative from a real estate agency in Jamsil-dong explained, "Prices for 30-pyeong units have come close to 3 billion KRW," adding, "Due to the large land share in Jamsil Jugong 5th complex, investment value is high, and besides local demand for switching homes within Jamsil, purchases by outsiders are also continuing."

House prices in the Gangnam area are considered a barometer of apartment prices in Seoul. In particular, prices of redevelopment complexes have a significant impact on the surrounding real estate market. Kyunghee Yeo, senior researcher at Real Estate R114, explained, "With redevelopment promotion issues, financially capable buyers are entering, driving up house prices in Gangnam," and added, "As the theory of price bottoming gains strength, transaction volumes are increasing across Seoul, where there is abundant waiting demand."

Accordingly, Seoul city is closely monitoring Gangnam house prices, which could potentially cause confusion in the real estate market. Recently, Mayor Oh marked his first anniversary in office by stating, "Controlling Gangnam house prices is the key to controlling house prices throughout Seoul," and pledged to suppress price increases through policy measures.

However, some point out that, as Mayor Oh envisions, to stabilize house prices downward through long-term measures such as housing supply via the new planning proposal, short-term price increases due to development issues are inevitable. A representative from a real estate agency in Apgujeong-dong said, "Being a land transaction permission zone and a speculative overheating district, and with redevelopment gaining momentum, available listings are very limited," adding, "As redevelopment progresses, price increases are unavoidable."