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 found that the average apartment price gap among Seoul's autonomous districts has reached up to fivefold this year. A decade ago, the gap was about 3.5 times, indicating that the disparity has widened. As the phenomenon of owning a "smart single property" intensifies, the trend of the rich getting richer and the poor getting poorer within Seoul has become even more pronounced.

According to the "Seoul Apartment Inequality Map" website, recently released by the Land+ Free Research Institute and Assemblyman Jin Sungjoon of the Democratic Party of Korea, the average apartment price in Seocho-gu in 2015 was around 930 million won, the highest among the 25 districts. Nowon-gu had the lowest average at 270 million won, a difference of about 3.5 times. As of this year, a decade 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 notice regarding sales is posted on real estate near Apgujeong Rodeo Station in Gangnam-gu, Seoul. Yonhap News

The gap becomes even more pronounced at the neighborhood level. In 2015, the average apartment price in Ssangmun-dong, Dobong-gu was 250 million won, while Apgujeong-dong, Gangnam-gu was about 1.55 billion won, a difference of 6.2 times. This year, the average price in Ssangmun-dong rose to 400 million won, an increase of about 150 million won over ten years. In the same period, Apgujeong-dong surged to 5.22 billion won, nearly a 3.7 billion won increase. The average apartment price gap between Ssangmun-dong and Apgujeong-dong has widened to more than 13 times, compared to ten years ago.

According to data from the Korea Real Estate Board, Seoul apartment prices have risen by 8.48% from the beginning of this year through the fourth week of December. Since there has not been a single weekly decline, it is virtually certain that this year's annual increase will be the highest ever. Previously, the highest annual increases were 8.0% in 2018 and 2021 under the Moon Jae-in administration, but this year has set a new record.

With apartment prices soaring rapidly in Seoul this year, housing instability has become a major issue, and polarization by region within the city has intensified. The research institute explained that the extreme polarization in apartment prices is the result of "smart single property" ownership, caused by a low effective property tax rate and excessive tax benefits for single-home ownership.

A chart depicting the annual increase in average apartment prices by each district in Seoul. Provided by Land+ Free Research Institute.

Regarding property tax, the officially assessed value, which serves as the basis for calculation, does not even reach 70% of market value (the actualization rate for multi-family housing is 69%). In addition, the fair market value ratio, which is subject to government discretion, is applied at 60%, further widening the gap between the market price and the property tax assessment basis.

Those advocating for stronger property taxes, such as civic groups, point out that Korea's effective property tax rate is low compared to advanced countries, making property ownership less burdensome and inevitably driving up demand. According to the Land+ Free Research Institute, Korea's effective property tax rate is around 0.15%, less than half the OECD average of 0.33%. On the other hand, some argue that Korea's property tax is not low, citing its high ratio to GDP or total tax revenue.

The research institute believes that as real estate inequality intensifies, assets-especially corporate investments-are being diverted from productive sectors into real estate. To address this, it suggests strengthening the land ownership tax while easing the building ownership tax, thereby restructuring the property tax system. Additionally, it recommends reducing excessive capital gains tax benefits for single-home ownership and lowering acquisition taxes only after prices and transaction volumes have stabilized, arguing that the overall real estate tax system needs to be revised.

Apartment Complex Panorama in Nowon-gu, Seoul

Regarding housing supply policy, the institute also suggested that increasing the supply of land-leasehold housing-where the public sector owns the land and only the buildings are sold-could help prevent capital gains from being concentrated among a few individuals. Nam Kiyeob, Director of the Land+ Free Research Institute, emphasized, "In Korean society, real estate is a major cause of inequality and economic inefficiency," and added, "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 while leaving real estate inequality 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."