When Ssangmun-dong Rose by 150 Million Won, Apgujeong Jumped by 3.7 Billion... Seoul Apartment Price Gap Widens Further Over 10 Years [Real Estate AtoZ]

Land+ Free Research Institute and Assemblyman Jin Sungjoon Create Seoul Inequality Map
"Apartment Polarization Deepens... Low Property Taxes and Excessive Single-Home Benefits"

A recent study has found that the gap in average apartment prices between districts in Seoul has reached as much as fivefold this year. Ten years ago, the difference was around 3.5 times, but the disparity has widened further. The so-called "one smart property" ownership trend has intensified, further entrenching the divide between the rich and poor even within Seoul.

According to the "Seoul Apartment Inequality Map" website recently released by the Land+Free Institute and Assemblyman Jin Sungjoon of the Democratic Party of Korea, the average apartment price in Seocho-gu in 2015 was about 930 million won, the highest among the 25 districts. Nowon-gu had the lowest average price at 270 million won, resulting in a gap of about 3.5 times. As of this year, ten years later, Seocho-gu remains the most expensive at 2.42 billion won, while Dobong-gu is the lowest at 500 million won, making the gap approximately 4.9 times higher.

A real estate sales notice is posted near Apgujeong Rodeo Station in Gangnam-gu, Seoul. Photo by Yonhap News

The disparity is even more pronounced when comparing neighborhoods. In 2015, the average apartment price in Ssangmun-dong, Dobong-gu was 250 million won, while Apgujeong-dong, Gangnam-gu was 1.55 billion won, a difference of about 6.2 times. This year, the price in Ssangmun-dong rose to 400 million won, an increase of about 150 million won over ten years. Apgujeong-dong, however, soared to 5.22 billion won during the same period, up nearly 3.7 billion won. The gap between the average apartment prices in Ssangmun-dong and Apgujeong-dong has now widened to more than 13 times, compared to ten years ago.

According to data from the Korea Real Estate Board, apartment prices in Seoul have risen by 8.48% from the beginning of this year through the fourth week of December. Since there has not been a single week of decline, the annual increase is expected to reach the highest level on record. Previously, during the Moon Jae-in administration, the highest annual increases were 8.0% in both 2018 and 2021, but this year is set to surpass those records.

As apartment prices in Seoul have risen sharply this year, concerns about housing instability have grown, and polarization between regions within Seoul has intensified. The institute explained that this severe polarization of apartment prices is the result of "the low effective property tax rate and excessive tax benefits for single-home ownership, which have led to the 'one smart property' phenomenon."

A graphical representation of the annual increase in average apartment prices by each district in Seoul. Provided by Land+Free Institute

For property taxes, the officially assessed value used as the basis for calculation is less than 70% of the market price (with the official realization rate for multi-family housing at 69%). In addition, the fair market value ratio, which can be adjusted at the government's discretion, is applied at 60%, further widening the gap between the actual market price and the basis for property tax calculation.

Groups advocating for stronger property taxes, such as civic organizations, point out that Korea's effective property tax rate is low compared to advanced countries, meaning that owning real estate is not burdensome and thus attracts demand. According to the Land+Free Institute, Korea's effective property tax rate is about 0.15%, less than half the OECD average of 0.33%. However, others argue that Korea's property tax is not low, citing its high ratio relative to GDP or total tax revenue.

The institute believes that as real estate inequality intensifies, assets, especially corporate investments, are being funneled into real estate rather than productive sectors. To address this, it suggests strengthening land ownership taxes while easing building ownership taxes, thereby restructuring property taxes. Additionally, it argues that capital gains tax benefits for single-home owners should be reduced, and acquisition taxes should be lowered only after prices and transaction levels stabilize, calling for a comprehensive overhaul of the real estate tax system.

Apartment Complex View in Nowon-gu, Seoul

Regarding housing supply policy, the institute recommends expanding the supply of land-leasehold housing, where the public sector owns the land and only the buildings are sold, to prevent capital gains from being concentrated among individuals. Nam Kiyeob, Director of the Land+Free Institute, emphasized, "We must remember that real estate is the main cause of inequality and economic inefficiency in Korean society," adding, "Our economy needs to shift from an 'asset economy' to a 'productive economy.'"

Assemblyman Jin stated, "It is difficult to transition to a productive economy if real estate inequality is left unaddressed," and added, "I hope that the tax and supply policy alternatives proposed in this report will be discussed in the National Assembly and government ministries to help reduce unearned income from real estate and achieve housing stability."