"1.5 Billion-Won Era for Standard Units in Gwanak" Record-High Prices Sweep Outer Seoul [Real Estate A to Z]

Demand piling into apartments under 1.5 billion won due to October 15 regulations and others
Price growth slowing in the three Gangnam districts... outer areas remain strong

View of ePyeonhansesang Seouldaeipgu in Gwanak-gu, Seoul. Photo by Bu Aeri

As the temporary suspension of heavy capital gains tax on multi-home owners has ended, apartment prices in the three Gangnam districts (Gangnam, Seocho, and Songpa) and Yongsan-gu are losing momentum, while the trend of "leveling out" housing prices across Seoul continues. Prices are rising steeply in outer areas of Seoul such as Gwanak-gu, which had previously drawn little attention. A certified real estate agent in Gwanak-gu said, "It has not yet been reported, but an 84㎡ exclusive-use unit at ePyeonhansesang Seoul National University Entrance recently traded at 1.52 billion won, and asking prices have climbed to as high as 1.6 billion won."

On weekends Millennials & Gen Z sweep in and buy... Gwanak ranks No. 1 in price growth for 3 consecutive weeks

Recently, the upward trend in housing prices in Gwanak-gu has continued. According to the Korea Real Estate Board on the 18th, the apartment sale price growth rate in Gwanak-gu was 0.40%, ranking first in rate of increase for three consecutive weeks. This contrasts with the slowing growth in apartment sale prices in Gangnam (0.02%), Seocho (0.13%), and Songpa (0.09%).

This phenomenon has occurred because the real estate market has been reorganized around end users as regulations have tightened, including the June 27 loan regulations and the October 15 measures. As demand has increased for mid- to low-priced apartments that match the 1.5 billion won price cap eligible for up to 600 million won in mortgage loans, prices of apartments in outlying areas have been jumping.

In particular, in the case of Gwanak-gu, which has good accessibility to Gangnam, demand has recently surged among younger buyers, making it difficult even to find listings. Certified real estate agents report that many young people who commute to Gangnam for work, as well as lawyers who commute to Seocho, have recently been actively seeking apartments in Gwanak.

Panoramic view of Gwanak Dream Town in Gwanak-gu, Seoul. Photo by Bu Aeri

A certified real estate agent near Gwanak Dream Town, which has more than 3,500 households, said, "I have been in this neighborhood for over 10 years, but I have never seen so few listings," adding, "On Saturdays, people in their 20s and 30s come in, and if there is a listing, they buy it immediately. These days many of the buyers were born in 1997 or 1998, so I am often quite surprised." In fact, according to the real estate big data platform Asil, the number of apartment sale listings in Gwanak Dream Town stands at 38, down 68% from 122 a year earlier.

Another nearby certified real estate agent also said, "In the past, a transaction used to take two months, but now that the market has shifted to actual transactions, it takes buyers only about a week to make a decision," adding, "There is no longer the luxury of taking a long time to think it over like before, and if you hesitate, the listing is gone."

Leveling trend in outer Seoul continues

Ahead of the end of the temporary suspension of heavy capital gains tax on multi-home owners, some key complexes in the Gangnam area and along the Han River belt in Seoul are seeing listings with asking prices cut by hundreds of millions of won, but buyers are not stepping in. For apartments priced over 2.5 billion won, mortgage loans are effectively capped at 200 million won, making them virtually out of reach for end users. In contrast, the strength of mid- to low-priced apartments in outer Seoul areas such as Nowon, Dobong, and Gangbuk continues, with new record-high transaction prices being set.

An apartment of 97.987㎡ at Nowon Lotte Castle Signature in Sanggye-dong, Nowon-gu, set a new record when it traded at 1.18 billion won on the 2nd. An 84.97㎡ unit at Cheonggu in Hagye-dong, Nowon-gu, also set a new record when it traded at 885 million won on the 10th. In Seongbuk-gu, a 59㎡ unit at Bomun Park View Xi traded at 1.17 billion won on the 3rd, marking its highest price.

Experts expect this trend to continue for the time being. Yoon Sumin, real estate specialist at NH Nonghyup Bank, said, "Rather than in core areas such as Gangnam-gu, we are seeing a 'gap-narrowing' phenomenon in which prices in areas like Nowon, Dobong, and Gangbuk or Geumcheon, Gwanak, and Guro are catching up more strongly," adding, "As end users pile in, listings are scarce and transactions are closing quickly, so prices of apartments in the average price range are likely to rise this year."