Despite Declining Transactions After Q3... 'Gangnam 3 Districts' Actual Transaction Prices Rise by 10.8%p

Despite Uncertainties, Preference for 'Smart Single Property' Remains Strong
Transaction Volume in Mayongseong and Nodogang Drops by 50 Percentage Points

Amid the contraction of the Seoul real estate market due to the implementation of Stress DSR Phase 2 and loan regulations, the sales prices in the Gangnam 3 districts (Gangnam, Seocho, Songpa) rose by more than 10% compared to August as of the end of last year. Despite ongoing uncertainties, buyers' preference for a 'smart single property' continues.

On the 23rd, Woori Bank's WM Sales Strategy Department reprocessed data from the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system and analyzed the transaction volume and average actual transaction price trends in major autonomous districts of Seoul in 2024. The average actual transaction price change rate in the Gangnam 3 districts from August to December last year recorded an increase of 10.8 percentage points. During the same period, the Mayongseong area (Mapo, Yongsan, Seongdong) rose by 1.8 percentage points, while Nodogang (Nowon, Dobong, Gangbuk) decreased by 3 percentage points.

The sales price per 3.3㎡ in major autonomous districts of Seoul also rose significantly in the Gangnam 3 districts, reaching 73.49 million KRW compared to 67.66 million KRW the previous month. In Nodogang, the average actual transaction price per 3.3㎡ was 22 million KRW as of December, showing a stable or declining trend since September (22.65 million KRW). Mayongseong also declined after September (53.88 million KRW), recording 50.6 million KRW as of December.

In the Gangnam area, firm waiting demand keeps asking prices relatively high, and investment sentiment remains strong due to expectations of price increases from relaxed reconstruction regulations. The prolonged trend of rising apartment pre-sale prices has also been cited as a factor driving up prices, as demand for purchasing reconstruction apartments in the Gangnam 3 districts, which guarantee business feasibility due to their prime locations, has increased.

The increase in transaction volume was also more pronounced in the Gangnam 3 districts. Last year, the number of transactions in major autonomous districts of Seoul generally showed a recovery trend until the third quarter, with the Gangnam 3 districts showing a particularly large increase. As of the third quarter, the average number of transactions in the Gangnam 3 districts increased by 105.6 percentage points compared to the first quarter. Seocho-gu especially rose by 128.3 percentage points, higher than Nowon-gu (113.1 percentage points), which has a large transaction volume. Due to concerns that the supply volume will decrease centered on Seoul and that the supply shortage will continue due to the strengthening of real estate project financing (PF), demand has concentrated in Seocho-gu, which is located along the Han River and has a concentration of newly built apartments among the Gangnam 3 districts.

From the fourth quarter, transaction volume showed a downward trend. The Gangnam 3 districts decreased by 47.7 percentage points compared to the third quarter, and Mayongseong also decreased by 50.6 percentage points. The decrease in transactions was greater than in Nodogang (-46.4 percentage points).

Since 2023, mortgage loans for apartments priced over 1.5 billion KRW resumed, leading to an increase in real demand buyers seeking to purchase a 'smart single property' using loans in high-priced residential areas. After September, with the implementation of Stress DSR Phase 2 and the combined effect of total household loan volume regulations in the financial sector, the purchase threshold rose, significantly dampening buying sentiment. Concerns about prolonged high inflation and political variables were also analyzed as factors affecting investment sentiment.

Nam Hyuk-woo, a real estate researcher at Woori Bank's WM Sales Strategy Department, said, "Although there are upward factors for prices and transactions in the market, such as additional base rate cuts and rising jeonse prices in the first half of this year, uncertainties for buyers remain due to external variables such as economic downturn, high exchange rates, and prolonged high inflation." He added, "Since interest rates are still high and Stress DSR Phase 3 (scheduled for July) will be implemented this year, the housing market is expected to continue to take a breather for the time being."