A Home Where I Live Well Alone... Small Units Became the 'National Standard' [Practical Financial Technology]

Popularity of Apartments Under 60㎡ Exclusive Area in Seoul
Small Apartment Subscription Competition Rate 113 to 1 in First Half of This Year
Small Apartment Transactions Increase from 4,400 to 11,403
Impact of Affordable Prices Compared to National Average and Increased Supply

Apartment complex in downtown Seoul.
[Photo by Yonhap News]

With the increase in single-person households, small apartments with exclusive areas of 60㎡ or less are gaining popularity in Seoul. The sale price of small-sized units is close to an absolute amount that single-person households can afford. Additionally, expectations for a "smart single property" are growing, and demand for small apartments is increasing even more in higher-tier areas.

Seoul Small Apartments See Subscription Competition Ratio of 112.83 to 1 in First Half of This Year... Small Apartment Transactions Reach 11,403 Units

According to real estate information company Real Estate R114 on the 6th, the average subscription competition ratio for small apartments in Seoul with exclusive areas of 60㎡ or less recorded 112.83 to 1 in the first half of this year. From July to the 5th, the average competition ratio for small apartments sold in Seoul was 218.97 to 1.

The popularity of small apartments is soaring in higher-tier areas. According to the Korea Real Estate Agency's subscription website, 35,602 people applied for 23 units in the first-priority subscription for the 59㎡ exclusive area of "Raemian Onepentas" in Seocho-gu, which was sold last month. This is the highest competition ratio among small apartments sold from 2022 to the 5th of this year. Around the same time, "Xi Hillstate Rachels" in Mapo-gu also saw 19,598 applicants for 78 units in the first-priority subscription for the same area.

Even within the same complex, the competition ratio difference grows as the unit size decreases. The subscription competition ratio for the 59㎡ exclusive area of Raemian Onepentas was 1,547.1 to 1, significantly surpassing the 454.5 to 1 ratio for the 84㎡ exclusive area. Similarly, the competition ratio for the 59㎡ exclusive area of Mapo Xi Hillstate Rachels was 251.26 to 1, higher than that of the 84㎡ exclusive area.

Not only subscriptions but also transactions of existing small apartments have increased. According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system, the number of apartment transactions in Seoul with exclusive areas of 60㎡ or less reached 11,403 units in the first half of this year. Following 4,400 units in the first half of 2022 and 8,444 units in the first half of last year, the number of small apartment sales has been steadily rising.

"Small Apartments Are More Scarce in Higher-Tier Areas"

The high popularity of small apartments in Seoul is largely due to the increase in single-person households and the relatively affordable price of small units compared to larger ones. According to the Housing and Urban Guarantee Corporation (HUG)'s "Private Apartment Sale Price Trends," the sale price per square meter of Seoul apartments is lower for smaller units. In June, the sale price per square meter for apartments with exclusive areas of 60㎡ or less in Seoul was approximately 11.85 million KRW, which is cheaper than the approximately 12.52 million KRW per square meter for apartments with exclusive areas over 60㎡ and up to 85㎡.

Yoon Ji-hae, senior researcher at Real Estate R114, said, "Demand for small apartments is rising due to the increase in single-person households," adding, "The absolute price being lower than the 84㎡ unit, known as the national standard size, is also a reason why buyers flock to them." He continued, "In higher-tier areas like Gangnam, the absolute sale price itself is higher, so demand concentrates more on small units," and "The 59㎡ units are popular, so their liquidity is also good." He also added, "Major complexes lack many ultra-small apartments, which in itself creates scarcity and attracts demand."

In this situation, construction companies are also increasing the supply of small units. A representative from a major construction company said, "Recently, developers and associations tend to increase the supply of 59㎡ units to meet the growing demand from single-person households," adding, "From a business perspective, selling four 59㎡ units is more profitable than selling two 84㎡ units."