'Gangnam 60%, Nowon 0%'... Record-High Transaction Polarization Deepens After Regulations [Real Estate AtoZ]

31% of November Transactions Set New Record Highs, Poised for Annual Peak
Gangnam, Seocho, Songpa, and Yongsan Dominate with 75% of Record-High Deals
Nowon and Gangbuk at 0% for Record-Highs, Outlying Demand Rapidly Cooling
Mixed Results Along the Hangang Belt
"Polarization Expected to Worsen"

This month, the proportion of apartment transactions in Seoul recorded at new all-time high prices is expected to reach its highest monthly level of the year. This trend is attributed to an increase in the share of transactions in Gangnam, Seocho, Songpa-the three Gangnam districts-and Yongsan, where the proportion of record-high transactions is particularly high, following the expansion of the land transaction permit zone (LTPZ) designation across all of Seoul on October 20. These areas have either seen a further increase in the proportion of record-high transactions or have maintained already high levels. In contrast, outlying districts such as Nowon, Dobong, and Gangbuk have seen their proportions stagnate or even drop to zero. Experts point out that the polarization within Seoul has deepened, as demand has become increasingly concentrated in the most preferred core areas, with buyers seeking to secure a single high-quality property even after the implementation of stricter regulations.

Apgujeong Hyundai Apartment. Photo by Hyunmin Kim kimhyun81@

According to an analysis conducted by Zigbang using data from the Ministry of Land, Infrastructure and Transport’s actual transaction price system, between November 1 and 24, 268 out of 859 apartment sales in Seoul, or 31%, were recorded at new all-time high prices. A record-high transaction refers to a sale that sets a new highest price for the same complex and unit size. The month with the highest share of record-high transactions so far this year was October, at 27%, but at the current pace, November is likely to set a new annual record.

The three Gangnam districts and Yongsan, which were first designated as LTPZs starting in March, are showing overwhelming strength in terms of record-high transaction shares. In Gangnam District, 57 out of 95 sales this month were at new record-high prices, accounting for 60%-the highest monthly level this year. Yongsan District also saw 13 out of 22 sales (59.1%) at new record highs, marking its annual peak. Seocho (57.7%) and Songpa (43.8%) did not reach their highest annual levels but still maintained high proportions. Combined, these four districts accounted for 200 record-high transactions, making up 75% of all such transactions in Seoul.

Although the number of transactions has been underreported since last month due to real estate regulations, the share of these four districts remains high even when this is taken into account. From November 1 to 24, there were 565 transactions recorded in the other 21 districts, while the four districts including the three Gangnam districts and Yongsan accounted for 294 transactions, representing 65.8% and 34.2% of the total, respectively. After the October 15 policy designated all 25 Seoul districts as LTPZs, regulated areas, and speculation-prone districts, the 21 districts that were not previously LTPZs experienced transaction delays due to unfamiliarity with the permit process. Now, one month after the implementation of the regulations, registrations of actual transactions in these 21 districts are gradually increasing.

Yoon Sumin, real estate specialist at NH Nonghyup Bank, said, "The government tried to curb high-end demand through regulations, but the stricter the regulations, the more buyers tend to avoid uncertainty and concentrate on areas with strong value preservation, showing a 'compressed investment' tendency." He added, "In effect, this paradoxically confirms the scarcity value of Seoul’s core areas."

In contrast, the trend of record-high transactions has virtually disappeared in Seoul’s outlying districts, highlighting a stark divergence. Nowon and Gangbuk districts recorded 22 and 14 transactions, respectively, this month, but not a single one set a new record high. Compared to October, when the proportion of record-high transactions in Nowon and Gangbuk was at least measurable, demand in the outskirts appears to have quickly weakened after the new regulations. Among the "No-Do-Gang" (Nowon, Dobong, Gangbuk) districts, only Dobong posted a record-high transaction share in the 3% range, which is not significant. In the "Geum-Gwan-Gu" (Geumcheon, Gwanak, Guro) area, except for Guro District, changes in the proportion of record-high transactions remained within about 2 percentage points.

There was also a mixed picture in major areas along the Hangang Belt. Seongdong (66.7%), Dongjak (58.3%), and Yeongdeungpo (50%) districts recorded their highest annual shares of record-high transactions this month. In contrast, Gwangjin (25.0%), Gangdong (33.3%), and Mapo (20.0%) districts saw their shares fall compared to October. Yoon explained, "The biggest difference between Mapo and Seongdong is the presence or absence of large-scale redevelopment zones. In areas with high expectations for redevelopment projects, such as the Seongsu Strategic Maintenance Zone in Seongdong, it is common for new listings to be immediately snapped up at record-high prices."

Yang Jiyeong, real estate specialist at Shinhan Premier Pathfinder, said, "Year-end is traditionally a slow season, so it is typical for both transaction volume and prices to adjust, but at present, the natural flow of the market is being distorted by regulations." He predicted, "Severe polarization in Seoul’s real estate market is likely to continue for the time being." He added, "While core complexes in the Gangnam area are seeing record-high prices with every transaction, it will be difficult for new record highs to emerge in outlying areas where real demand has been dampened by regulations."