Gangnam Apartment Prices Reach Levels of Singapore, Where Per Capita GDP Is Twice as High

'Smart One Unit' Prices Soared Over the Past Year
Seoul's Population Continues to Decline...

After five consecutive weeks of slowing growth following the June 27 loan regulation announcement, the rate of increase in Seoul apartment prices rebounded in the first week of August. According to the Korea Real Estate Board, Seoul apartment prices rose by 0.14% in the first week of this month, with the rate of increase expanding by 0.02 percentage points compared to the previous week. However, there are claims that further price increases may be limited, as apartment prices in Gangnam, Seoul, have reached a level comparable to Singapore, a city-state with a per capita GDP twice that of Seoul.

'Smart One Unit' Soared Over the Past Year

On August 10, BNK Investment & Securities published a report titled "Debate: Focus on Tariffs, Interest Rate Cuts, and Real Estate," analyzing that over the past decade, the rate of increase in Seoul apartment prices has been relatively high compared to cities with similar residential types such as Singapore and Hong Kong. The report also noted that apartment prices in Gangnam have risen to levels comparable to Singapore's prime districts.

Over the past year, apartment prices in Gangnam District surged by 28.6% compared to the same period last year. As of July, the average sale price per pyeong reached 115 million KRW. Seocho District also saw its average price per pyeong rise to 106 million KRW. These figures are close to the average price per pyeong of 120 million KRW in Singapore's core downtown area as of the end of last year. In Hong Kong, apartment prices vary by size, with the average sale price per pyeong for 21-30 pyeong units at 100 million KRW, and for 30-49 pyeong units at 121 million KRW. In Hong Kong, after a 27.4% plunge in home prices following the "Hong Kong Spring" of 2021, the downward trend has only recently begun to stabilize. In conclusion, apartment prices in Gangnam District have risen to nearly the same level as the high apartment prices in Singapore and Hong Kong.

Seoul's Population Is Declining...

When looking solely at per capita GDP, Singapore is overwhelmingly higher. Last year, Singapore's per capita GDP was $91,100, while Hong Kong's was $44,700. As of 2023, Seoul's per capita GDP was $44,600. However, population trends over the past ten years (2014-2024) have differed. While Singapore and Hong Kong have continued to see population growth, Seoul's population has been on the decline.

Kim Seongno, an analyst at BNK Investment & Securities, stated, "The most expensive apartment prices in Seoul, such as those in Gangnam and Seocho Districts, are assessed to be at similar levels to those in Singapore and Hong Kong." He added, "However, considering income levels and changes in population, resistance to apartment prices in Gangnam and Seocho may increase."

With South Korea's economic growth rate hovering in the 0% range, further interest rate cuts are needed. He added, "The expectation that interest rate cuts could stimulate further increases in apartment prices is an obstacle to lowering rates."