This Area Surged to No. 1 in Seoul Apartment Price Gains While Gangnam Hit Bottom... "Gap Closing" in Full Swing [Real Estate A to Z]

“Gap Narrowing Market to Continue Ahead of the Spring Moving Season”

This week (as of the 2nd), apartment prices in Gwanak-gu, Seoul rose 0.57% in just one week. Among Seoul's 25 districts, it ranked first in weekly growth rate for the second consecutive week, and its cumulative increase for this year is also the highest at 2.06%. During the same period, Gangnam-gu rose only 0.07%, the lowest rate of increase in Seoul. The upward trend that had been led by high-priced areas such as Gangnam and Seocho until last year is now spreading to mid- to low-priced areas, signaling a full-fledged "gap closing" market, in which price gaps narrow.

According to the Korea Real Estate Board's "Weekly Apartment Price Trends" released on February 7, the change in sales prices in Gwanak-gu surged from 0.30% in the second week of January, to 0.44% in the third week, 0.55% in the fourth week, and 0.57% this week. A weekly increase of 0.57%, when annualized, amounts to a surge of about 30%.

From Seocho to Dongjak to Gwanak, a Typical "Gap Closing"

View of city apartments from Namsan in Seoul. Yeonhap News

It is unusual for housing prices in Gwanak-gu to rise faster than those in Gangnam-gu and Seocho-gu. While the three Gangnam districts (Gangnam, Seocho, and Songpa) rose 14% to 21% over the course of last year, Gwanak-gu increased only 4.21%. Yet this year, Gwanak-gu has climbed to first place in terms of growth rate, while Gangnam-gu has instead fallen to the bottom.

Industry experts view this as a typical "gap closing" phenomenon. Yoon Sumin, real estate specialist at NH Nonghyup Bank, said, "The most basic investment psychology is that when prices in a top-tier area rise, investors look for the next area that is relatively undervalued," adding, "When Seocho-gu goes up, demand moves to Dongjak-gu, and when Dongjak-gu goes up, it moves to Gwanak-gu. After Dongjak-gu rose significantly last year, demand shifted to Gwanak-gu this year."

In fact, this week's changes clearly show a pattern in which areas that rose first are slowing, while lagging areas are catching up: Seocho-gu is up 0.21%, Dongjak-gu 0.29%, and Gwanak-gu 0.57%. Yoon noted, "Jeonse and monthly rents are also rising, which has pushed up the basic price level itself," and added, "These are areas that were not preferred in the past, but anxiety that 'I should at least buy this much' is playing a major role."

Standard 84-Square-Meter Units in the 800 Million Won Range... "Feasible by Adding a Loan to the Jeonse Deposit"

Price accessibility is cited as a key reason demand is flocking to Gwanak-gu. Based on the standard national floor plan (exclusive area of 84 square meters), the average transaction price in Gwanak-gu is in the 800 million won range. It rose from 839.94 million won in December last year to 884.44 million won in January this year, but it is still less than half the level of the Gangnam area.

Transaction volume is also increasing. After slowing to 97 cases in November last year, it rebounded to 161 in December. As of the 6th of January this year, there had already been 140 transactions, and considering the actual transaction reporting deadline (within 30 days of contract signing), the figure is expected to surpass the previous month.

Ham Youngjin, head of the Real Estate Research Lab at Woori Bank, said, "In Gwanak-gu, there are many apartments priced between 700 million and 1 billion won that can be purchased by adding a mortgage loan to the jeonse deposit, and it takes less than 20 minutes by subway to reach Gangnam and Yeouido," adding, "As loan regulations have made it harder for end users to enter high-priced areas, they are flocking to regions with lower price burdens, leading to this gap-closing phenomenon."

Following the June 27 measures last year, which capped mortgage loan limits at 600 million won, the October 15 measures further tightened limits for homes priced above 1.5 billion won to 200 million to 400 million won, significantly raising the threshold for purchasing high-priced housing. Meanwhile, because loan limits have been maintained for properties priced at 1.5 billion won or less, analysts say the regulatory windfall is being concentrated in mid- to low-priced areas where loans can still be utilized, such as Gwanak-gu and Suji in Yongin.

Suji in Yongin Ranks First Nationwide... Spreading to Gyeonggi Province

The trend of demand, squeezed out of high-priced areas by affordability concerns, seeking second-best options is also appearing in Gyeonggi Province. Suji-gu in Yongin, which has recorded the highest cumulative apartment price increase in the country this year, is a prime example. It has good accessibility to Bundang and Gangnam, and as long as a complex is not newly built or immediately adjacent to a subway station, it can be purchased in the 900 million to 1 billion won range, attracting many end users in their 30s.

The exclusive 92-square-meter unit in "Forena Gwanggyo Sanghyeon" (639 households) in Sanghyeon-dong was traded for 900 million won last month, marking the highest price in a year. Compared with a transaction of 600 million won for the same size unit in August 2024, this represents a jump of 300 million won in a year and a half. The exclusive 128-square-meter unit in "Jinsan Maeul Samsung 5th" (1,828 households) in Pungdeokcheon-dong also changed hands for 1.15 billion won last month, and the exclusive 84-square-meter unit in "Suji Jinsan Maeul Prugio" (439 households) likewise sold for 1.05 billion won, the highest price in a year.

The gap-closing market is expected to continue for the time being. Ham predicted, "Gap closing will continue in areas such as Nowon, Dobong, and Gangbuk, as well as Geumcheon, Gwanak, and Guro, and in Hanam and Suji in Yongin," explaining, "This is because, ahead of the spring moving season and the peak marriage season, listings for sale are increasing while jeonse listings are decreasing." However, he added, "Depending on how the tax reform plan is shaped in July, the trend could change in the second half of the year."