"You Have to Squeeze In, Even if It's Small"... Gangnam Apartments Under 59m² Lead Price Gains After October 15 Measures [Real Estate AtoZ]

Southeast Seoul’s 40-60m² Apartments Lead Citywide Price Growth
Annual Top Performer Is the “National Standard Size,”
But Small Units Dominate Post-Policy Trend
“Downsizing Entry Strategy” Spreads as Demand Pours into Small Gangnam Apartmen

"The smaller it is, the higher it rises."

Recently, the price surge of small apartments in Seoul's Gangnam area has been remarkable. Even after the government's October 15 real estate measures reduced buyers' financial capacity, demand for "Gangnam, no matter how small" has driven up prices for apartments of 59㎡ or less, leading the market's upward trend. Analysts say that end-users, seeking to enter Gangnam while avoiding lending restrictions, are now experiencing a "forced downsizing" phenomenon.

Jamsil Els, a dedicated 59㎡ unit recently traded for 3.1 billion KRW. Gigi Auction.

According to the Korea Real Estate Board's "Weekly Sales Price Index by Size," which aggregated three sets of data after the policy (from the fourth week of October to the second week of November), apartments in Seoul's southeastern region (Gangnam, Seocho, Songpa, and Gangdong districts) with a floor area of over 40㎡ up to 60㎡ recorded a price increase of 1.25%. This was the highest growth rate among all size categories and regions in Seoul during the period. In the southeastern region, the next highest increases were seen in apartments over 60㎡ up to 85㎡ (0.92%), over 85㎡ up to 102㎡ (0.79%), 40㎡ or less (0.67%), over 102㎡ up to 135㎡ (0.66%), and over 135㎡ (0.56%). Excluding units under 40㎡, small-sized apartments stood out for their price growth.

Typically, the most popular size is the so-called "national standard size" of 84㎡. In fact, throughout this year, apartments in the southeastern region over 60㎡ up to 85㎡-which includes the 84㎡ units-had the highest cumulative increase (15.13%) among the six size brackets. During the same period, units over 40㎡ up to 60㎡ saw a 13.22% increase, ranking third after those over 102㎡ up to 135㎡ (13.94%).

The Korea Real Estate Board's sales price index by size divides apartments into six groups based on floor area: 40㎡ or less, over 40㎡ up to 60㎡, over 60㎡ up to 85㎡, over 85㎡ up to 102㎡, over 102㎡ up to 135㎡, and over 135㎡. Seoul is further divided into five regions: southeast, southwest, northeast, northwest, and central.

Real estate experts interpret this trend as "involuntary downsizing" driven by policy incentives. As loans for high-priced homes have been restricted, more buyers are reducing the size of their desired properties to fit their financial capacity and still enter Gangnam. Under the October 15 measures, mortgage loans in regulated areas are capped at 600 million KRW for apartments priced at 1.5 billion KRW or less, 400 million KRW for those between 1.5 billion and 2.5 billion KRW, and 200 million KRW for those over 2.5 billion KRW.

Park Wongap, Chief Real Estate Expert at KB Kookmin Bank, said, "Preference for Gangnam remains strong, and there is still a lot of pent-up demand. End-users are turning to small apartments as a strategy to enter Gangnam while staying within the loan limits and avoiding regulations." He added, "This trend is not so much a voluntary choice as it is a forced structural change."

In fact, small apartments are being traded at record-high prices. In Banpo-dong, Seocho District, a 59㎡ unit at The H Banpo Ra Class sold for 3.75 billion KRW on November 5, surpassing the previous record of 3.65 billion KRW (set in September) by 100 million KRW. Considering that prices were around 3.1 to 3.2 billion KRW at the beginning of this year, this means an increase of about 600 million KRW in less than a year. Around the same time, a 59㎡ unit at Jamsil Els in Songpa District also set a new record, trading for 3.1 billion KRW.

Kim Hyosun, Chief Real Estate Expert at NH Nonghyup Bank, said, "With loan limits tightened, end-users with reduced financial capacity are switching to smaller units in Gangnam. Entering Gangnam is seen as more than just a residential choice-it's a symbolic decision. Combined with the increase in one- and two-person households and the area's locational appeal, the preference for small apartments is likely to intensify for the time being."