Seoul Apartment Sale Prices Turn Up After 14 Months... Led by 'Gangnam 3 Districts'

The Seoul apartment sale prices have exited the downward phase after 14 months. It is interpreted that the price increase in the three Gangnam districts is driving the rebound in apartment prices.

[Image source=Yonhap News]

On the 21st, according to a monthly apartment sale price change rate survey by Real Estate R114, Seoul's prices rose by 0.01% in July, marking the first price increase in 14 months since May last year (0.09%). The downward trend stopped in Seoul's Guro, Seongdong, Yongsan, Jongno, and Jung districts, and Seodaemun and Jungnang districts turned to positive change rates for the first time this year. The Gangnam 3 districts (Gangnam, Songpa, Seocho) also saw a larger price increase than last month, lifting apartment prices.

In particular, the recovery speed of apartment prices in the Gangnam 3 districts was remarkable. During last year's real estate slump, the Gangnam 3 districts experienced a deeper and faster price decline compared to other areas. In December 2022 alone, prices dropped by as much as 0.63%. However, since March this year, the decline has gradually narrowed, and in June, the upward trend continued for two consecutive months. The gap in change rates between the Gangnam 3 districts and other autonomous districts has also widened to ▲0.09 percentage points in March ▲0.10 percentage points in April ▲0.11 percentage points in May ▲0.12 percentage points in June ▲0.15 percentage points in July.

[Image courtesy of Real Estate R114]

The apartment price increase in the Gangnam 3 districts was led by newly built complexes within five years of completion in Gaepo-dong, Gangnam-gu, and early reconstruction complexes in Daechi-dong, Banpo-dong in Seocho-gu, and Sincheon and Jamsil-dong in Songpa-gu. Especially, early reconstruction complexes lowered the threshold for project implementation through the relaxation of safety inspection standards at the beginning of the year and the safety inspection cost loan support implemented in July.

Also, maintenance projects through rapid integrated planning became feasible for securing profitability due to the relaxation of height restrictions, and with the expectation of faster project progress due to reduced procedures, the asking prices of promising reconstruction complexes remain high.

While the price increase in July was mainly evident in high-end complexes in Seoul's prime areas, it is expected that the number of rising areas will increase and a gradual upward trend will continue as buying sentiment improves with the spread of recognition of the housing price recovery phase.

A Real Estate R114 official said, "The apartment prices in the Gyeonggi and Incheon areas, which had not escaped negative change rates within the year, are also being driven together, so the rebound areas are likely to expand," but added, "However, depending on transaction volume trends and the presence of favorable factors by region, the speed and magnitude of price increases will vary, so it will take a little more time for the apartment price trend reversal across the entire metropolitan area."