[Current & Culture] Apartments Enter the Super-Gap Era

Changes in Community-Oriented Residential Culture
Declining Appeal of Commercial Real Estate
Rethinking the Dilemmas of the Super-Gap Era in Real Estate

Looking back, I have experienced a wide range of residential cultures in Korea. I have lived in rural houses with yards, studio officetels, first-generation apartments built in the 1970s, 1990s apartments that introduced underground parking for the first time, and newly built Gangnam apartments with community facilities. Since elementary school, I have been very interested in real estate; whenever I visited friends' or relatives' homes, I would wander around apartment complexes, observe what was in the neighborhood, and even write about it in my diary.

My interest in residential culture shifted to the real estate market as I grew older. It remains the same today. Real estate is as appealing as music and as entertaining as baseball because it is a stage where capitalist desires are most vividly displayed. Even after my child entered university, I kept track of the private education market and entrance exam trends for this reason. The results of these worldly and blatant desires resemble the works of avant-garde artist H. R. Giger, famous for his alien designs.

Before the term "site visit" (imjang) became common, I started visiting sites in my mid-20s. I visited model houses and real estate agencies frequently, building friendships with the owners. I carefully checked news and columns, forming my own predictions and hypotheses, and still verify how accurate they are. I pride myself on being able to read the flow of the real estate market well, but I did have one crucial wrong prediction.

Despite criticism that it infringed on property rights, when the government regulated multi-homeowners, I expected the residential real estate market to stabilize soon. I anticipated that a smart single property would be somewhat favored, but I naturally thought that due to strong policies?strong enough to provoke constitutional lawsuits?and a declining population, properties above a certain price would shift to commercial real estate.

As everyone knows, the result was extreme polarization, fittingly described by the once best-selling term "super-gap" (chogyeokcha). While unsold units overflow in provincial areas, prices in Seoul have not dropped significantly or have even risen slightly. Within Seoul, the actual transaction price graph for Gangnam apartments is much steeper than in other areas. Even within Gangnam, the gap between apartments along the Han River and those away from it is widening, and among those, apartments in Banpo and Apgujeong with Han River views are up to 1 billion KRW more expensive than those without, accelerating polarization.

The Banpo Han River-side apartments, considered the top tier of the current real estate market, have sold 50-pyeong units for over 10 billion KRW, surpassing 200 million KRW per pyeong, and 30-pyeong units, known as the national standard size, have exceeded 6 billion KRW. Meanwhile, a 40-pyeong apartment in Sejong City that traded for 1.4 billion KRW in 2020 has plummeted repeatedly, selling last month for 720 million KRW, and 30-pyeong units that once exceeded 1 billion KRW are now trading around 500 million KRW.

Analyzing after the fact is easy. From 2021, policies that significantly increased capital gains tax on multi-homeowners and imposed heavy penalties were implemented. Changes in residential culture aiming to solve as many needs as possible within apartment complexes also had a big impact. The prolonged recession in self-employment has diminished the appeal of commercial real estate. Just a few years ago, the phrase "the landlord above the creator" was common, but now the phrase "the fall of the landlord" is circulating. This is not a temporary phenomenon. Will the golden age of self-employment return? Will the preference for new residential cultures like communities shift towards preferring built apartments?

Although regulations on multi-homeowners have somewhat eased, many accumulated restrictions remain that prevent the unevenly concentrated real estate capital from spreading evenly. Which is better: many people's home prices rising evenly, or only a very few homes' prices rising more? This is the dilemma of the apartment super-gap era.

Lee Jae-ik, SBS Radio PD and Novelist