[Real Estate Strategies] LTPZ as a Catalyst: Is a Seoul Real Estate Boom on the Horizon?

Gangnam 3 Districts Lead Sales Price Index Uptrend After LTPZ Lift and Base Rate Cut
Mapo and Seongdong Also See Record-High Transactions
Consumer Sentiment Improves as Supply Volume Shrinks

Following the lifting of Seoul's Land Transaction Permission Zone (LTPZ) designation, not only the three Gangnam districts but also areas such as Mapo and Seongdong are seeing an increasing number of apartment complexes setting new record-high prices. The Bank of Korea's decision to cut the base interest rate, combined with forecasts that this year's apartment supply will fall short of previous years, is further improving market sentiment. Some analysts even predict that the upward trend in prices will spread across Seoul, signaling the start of a full-fledged recovery market.

On February 25, the Bank of Korea's Monetary Policy Board lowered the base interest rate by 0.25 percentage points, from 3% to 2.75%. On February 24, Financial Services Commission Chairman Kim Byung-hwan commented, "It seems that banks should now reflect the base interest rate cut in their lending rates." He also noted, "We are seeing prices rise, particularly in areas where the LTPZ has been abolished," while adding, "Although household loans have increased this month, the situation is not cause for concern."

The financial authorities have relaxed the strict household loan management standards that were reinforced at the beginning of the year, and with the recent rate cut, there are expectations that the burden of borrowing will ease further.

Gangnam 3 Districts Soar After LTPZ Lifted

In reality, apartment prices in Jamsil-dong, Songpa-gu, Seoul, where gap investment is now possible, are surging. Jamsil-dong has been one of the epicenters of rising Gangnam property prices. With Seoul lifting the LTPZ designation, the area has emerged as a direct beneficiary, enabling gap investments. In Jamsil, leading complexes such as Els, Lizenze, and Trizium are seeing asking prices for standard units (85㎡) climb as high as 3.3 billion won, indicating signs of overheating. As prices in Songpa rise, those in even more premium areas like Gangnam and Seocho are also increasing, leading to a general upward trend in transaction prices across the three Gangnam districts.

According to the Korea Real Estate Board, Seoul's apartment sales prices in the third week of February rose by 0.06%, up from 0.02% the previous week. Songpa-gu (0.36%) and Gangnam-gu (0.27%), which are directly affected by the LTPZ lift, saw increases, as did Seocho-gu (0.18%). Gwangjin-gu (0.05%) and Mapo-gu (0.02%) also followed suit.

Notably, Songpa-gu's weekly apartment price index showed a consistent upward trend over the three weeks of February, with increases of 0.13% in the first week, 0.22% in the second week, and 0.36% in the third week. Seocho-gu also posted consecutive increases of 0.11% and 0.18% in the second and third weeks, respectively. Gangnam-gu saw increases of 0.08% and 0.27% over the same period.

Mapo and Seongdong Also See Record-High Transactions

The 'awakening' of property prices is not limited to the three Gangnam districts. Since last month, a growing number of new developments in Mapo-gu and Seongdong-gu have set new record-high prices. On February 17, a 59㎡ unit at Mapo Prestige Xi in Yeomni-dong, Mapo-gu, set a new record at 1.845 billion won. On January 20, an 84㎡ unit traded at 2.39 billion won, up 90 million won from the previous transaction. On February 14, a 139㎡ unit at Sinchon Forest IPark in Sinsu-dong, Mapo-gu, was sold for 3 billion won, marking a new high.

In Seongsu-dong 1-ga, Seongdong-gu, a 69.72㎡ unit at Trimage was sold for 3.15 billion won on January 27, which is 150 million won higher than the previous record set in July last year. A 134㎡ unit at Raemian Oksu Riverzen was sold for 3.18 billion won on January 22, up 260 million won from the previous record of 2.92 billion won set in January.

Improved Investment Sentiment and Supply Volume as Key Variables

As the market warms up, consumer sentiment is also gradually improving. In January, Seoul's Housing Market Consumer Sentiment Index rebounded to 104.8, reversing a five-month decline that began after July 2023 (140.6).

The projected decrease in new apartment supply in Seoul this year is also fueling buying sentiment. According to Real Estate R114, the nationwide number of new apartment units scheduled for sale this year is expected to decrease by 26.4% compared to last year. In Seoul, the estimated supply is 21,660 units, down 31.1% from last year's 31,443 units. Notably, 51% (11,187 units) of the planned supply in Seoul does not yet have a confirmed sales schedule. The construction industry is closely monitoring market trends, and depending on market conditions, there is a possibility that sales launches will be postponed, which could further reduce supply.

Mixed Outlook for Seoul's Sales Market

Experts believe that Seoul's real estate market could enter a full-fledged upcycle starting in the first half of this year. Yoon Sumin, a real estate specialist at NH Nonghyup Bank, said, "The lifting of the LTPZ acted as a catalyst, and calls to lower mortgage rates have also emerged, resulting in price increases and the pace of demand inflow being greater and faster than expected. With the base interest rate cut, demands for lower mortgage rates, and supply shortage issues, capital is flowing more rapidly into what are considered prime areas."

Kim Jaekyung, head of Tumi Real Estate Consulting, commented, "Last year, the market stagnated due to lending regulations, but the LTPZ lift acted as a trigger, accelerating the upturn that was originally expected in the second half of this year. With prices rising and transaction volumes increasing in areas like Mapo-gu, Seongdong-gu, and Gangdong-gu, we may see a 'buy quickly' movement in Seoul. In particular, supply in Seoul is expected to fall to one-third of current levels starting in 2026, and the market is likely to heat up sequentially across the city."

On the other hand, some argue that it is premature to say the upturn will spread across all of Seoul. Ham Youngjin, head of the Real Estate Research Lab at Woori Bank, explained, "Whether the market heats up across Seoul will depend on factors such as the resolution of political uncertainty, the pace and magnitude of further base rate cuts, and price increases in the rental market. There is a risk that only the Gangnam concentration phenomenon will intensify. Since Seoul's apartment transaction volume has remained at around 3,000 per month since September last year, the market appears to be centered on complexes that directly benefit from the LTPZ lift, rather than a citywide recovery."