Seoul Housing Prices Stir... "Only Rising Areas Go Up"

While apartment prices nationwide have declined for 19 consecutive weeks, Seoul's housing prices are showing signs of fluctuation. It is analyzed that institutional stimuli such as the rise in jeonse prices, supply shortages, and special loans have had an impact. Experts predict that Seoul's housing prices will show a firm upward trend in the future.

Apartment complex in downtown Seoul / Photo by Yonhap News

Seoul Housing Prices Rise for 2 Consecutive Weeks

According to the Korea Real Estate Board on the 5th, the apartment price change rate in Seoul for the first week of this month (as of the 1st) was 0.02%, the only increase among the 17 metropolitan cities and provinces nationwide. After halting a 15-week consecutive decline and rebounding last week (0.01%), the upward trend continued.

By autonomous district, apartment prices rose in 18 districts. The number of areas with price increases rose compared to the previous week (12 districts). The highest increases were in Mapo-gu (0.13%), Yongsan-gu (0.07%), Songpa and Seongbuk-gu (each 0.05%), Seocho and Yangcheon-gu (each 0.04%). This contrasts with the nationwide trend of continued decline in apartment sale prices.

Kim Gyu-jung, a real estate research fellow at Korea Investment & Securities, said, "It is reasonable to consider it an increase only in Seoul," adding, "The actual transaction price index has improved, and the transaction volume for January to March this year is higher than that of the previous fourth quarter." However, he added, "Investors are moving mainly toward stable investment areas such as Gangnam rather than being aggressive."

The actual transaction price index for Seoul apartments, released by the Real Estate Board, rose by 0.45% as of January this year, marking an increase for the first time in four months since September last year (0.94%). According to the Seoul Real Estate Information Plaza, the monthly transaction volume of Seoul apartments has been around 2,500 units since the beginning of this year. Compared to the contraction to the 1,800 range in November to December last year, it is analyzed that quick-sale properties are disappearing.

Buyer sentiment is also reviving. According to the real estate market consumer sentiment survey published by the Korea Research Institute for Human Settlements, the consumer sentiment index for the Seoul housing sales market was 111.4 in February, up 7.1 points from the previous month (104.3). An index above 100 means that more respondents reported price increases or increased transactions. The index had fallen to 99.6 in December last year but has recently been recovering.

Polarization Expected to Deepen as Only Some Areas Rise

However, even within Seoul, some areas have not shown a recovery in housing prices, leading to expectations of deepening polarization. Dobong-gu (-0.05%), Geumcheon-gu (-0.03%), and Nowon and Gwanak-gu (each -0.02%) continued to decline amid a wait-and-see stance.

Kim Eun-sun, lead of the Zigbang Big Data Lab, said, "The adjustment has been prolonged, and the market is not showing an overall recovery," adding, "There is a clear preference for areas where actual demand continues to be maintained." He also noted, "In Seoul, the Gini coefficient measuring inequality within regions is widening," adding, "It increased from 0.328 in July last year to 0.336 in March this year."

Meanwhile, Seoul's apartment jeonse prices have also risen for 46 consecutive weeks since the fourth week of May last year. By district, Dongdaemun-gu (0.16%), Dongjak-gu (0.14%), Yongsan and Jungnang-gu (each 0.13%), and Mapo-gu (0.11%) saw relatively large increases. A Real Estate Board official stated, "With the sales market in a wait-and-see mode, jeonse demand is steadily maintained, causing a shortage of listings," adding, "Transactions and price increases occurred mainly in areas near subway stations and with favorable living conditions."