Apartments Over 30 Years Old Rise 3.7% Annually
Demand Concentrates on Apartments Over 10 Years Old
Prices Expected to Rise Alongside New Apartments
As prices of newly built apartments in Seoul surge, demand is shifting towards older apartments expected to undergo reconstruction, according to an analysis. Following the trend of 'Eoljuksin' (preferring new apartments no matter what), the so-called 'Eoljukjae' (preferring reconstruction no matter what) trend is emerging.
Real estate research firm Real Estate R114 announced on the 13th that an analysis of apartment transactions in Seoul by building age over four years since 2021 showed that the average sale price of apartments less than 10 years old increased by an average of 9.1% annually.
The price growth rate of apartments over 30 years old, which corresponds to the building age for redevelopment projects, followed with an average annual increase of 3.7%. Apartments aged over 10 years but less than or equal to 30 years saw an average annual price increase of 3.5%, indicating less price volatility compared to apartments under 30 years old.
Recently, a shift in demand towards apartments older than 10 years has also been observed. While newly built apartments still dominate the Seoul market, rising prices due to supply shortages are raising the entry barriers for buyers.
Looking at transaction shares by building age, the proportion of sales of newly built apartments under 10 years old decreased from 22.3% in 2021 to 19.9% this year. The transaction share of apartments aged over 10 years but less than or equal to 30 years and those over 30 years old increased from 64.8% in 2022 to 76.1% last year. This year, the share has risen further to 80.1%.
A representative from Real Estate R114 explained, "As the rapid rise in new apartment prices and household debt management measures require strong cash holdings, demand is shifting towards older apartments." They added, "Especially from June, with the announcement of mandatory certifications for zero-energy buildings and installation of fire response facilities for electric vehicles, pressure on pre-sale prices is expected to intensify."
Moreover, with the anticipated simplification of reconstruction procedures mainly for apartments over 30 years old in the first half of the year, price increases for older apartments are expected. The market has already observed slight price increases mainly in apartments over 30 years old.
A Real Estate R114 official stated, "Preference for Eoljuksin will continue, but supply is limited. Demand is expected to concentrate on reconstruction apartments with good locations that are likely to be transformed into new buildings. Prices are expected to continue rising in tandem with new apartments for the time being."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
