The gap in apartment sale prices between Seoul and other regions is widening. The land price increase rate in Seoul is much higher than that in other areas, and the demand for so-called "high-end" apartments, which use expensive materials, has led to increased construction costs.
According to the Korea Housing and Urban Guarantee Corporation (HUG) on the 11th, the sale price per 3.3 square meters of private apartments in Seoul was recorded at 47.195 million won as of the end of November last year. This level is far above the national average sale price of 19.078 million won. It corresponds to four times the lowest sale price in the regions, which is 11.775 million won in South Chungcheong Province. This means that for the price of one apartment in Seoul, one could buy four apartments in the South Chungcheong region.
The gap in private apartment sale prices between Seoul and other regions has been widening over time. As of November 2023, the sale price for apartments in Seoul was 34.145 million won per 3.3 square meters, while it was 12.768 million won in South Chungcheong Province. Over the past year, the sale price for apartments in Seoul has risen by 38.2%, while the sale price in South Chungcheong Province has dropped by 9.2%. The overall sale price in the regions only increased by 2.1%, from 14.612 million won to 14.932 million won.
Market observers have pointed to "land prices" as the background for the widening gap in sale prices between Seoul and other regions. Sale prices consist of land costs and construction costs, and the gap is widening in terms of land costs. According to the Ministry of Land, Infrastructure and Transport, nationwide land prices increased by 0.59% compared to the previous quarter as of the third quarter of last year. Among 17 cities nationwide, Seoul had the highest increase at 0.87%, while Jeju saw a decrease of 0.17%. In the 250 cities and counties nationwide, the land price increase rate in Gangnam District of Seoul was the highest at 1.45%.
Lee Eun-hyung, a researcher at the Korea Construction Policy Institute, noted, "Assuming construction costs are the same, the differences in land costs result in differences in sale prices," adding, "Considering that various construction material factories are located in the regions, even small costs like transportation will differ."
The rising demand for high-end brands from large construction companies centered around Seoul is also a reason for the widening sale prices. Except for Samsung C&T's "Raemian" and GS Engineering and Construction's "Xi," most large construction companies operate separate high-end brands. Notable examples include Hyundai Engineering & Construction's "The H," Daewoo Engineering & Construction's "Summit," and DL E&C's "Acru."
A representative from a large construction company said, "There is a trend to upscale apartments in areas where high prices can be accepted," adding, "There is high demand for high-end brands that use premium materials centered around Seoul and the metropolitan area."
Ham Young-jin, head of the real estate research lab at Woori Bank, said, "It is also necessary to consider that relatively high sale prices can be obtained in areas with high demand for sales," adding, "While there tends to be high competition rates for subscriptions in Seoul, there are currently 50,000 unsold units stockpiled in the regions."