Seoul apartment prices hit a record high about five months after the Lee Jae-myung administration took office. This far surpassed the record high set during the Moon Jae-in administration.
According to the Korea Real Estate Board (KREB) on the 27th, Seoul's apartment sale price index reached 105.6 as of the 20th of this month, marking a record high. It had already surpassed the previous record high (104.6) set in January 2022 during the Moon Jae-in administration as of a week earlier (the 13th).
The sale price index is a price indicator calculated by the Korea Real Estate Board (KREB) by combining actual apartment transaction prices and market quotes. Mar. 31 of this year is set as the base point (100).
It is seen as the result of pent-up demand rushing to buy homes during the holiday, after real estate measures were signaled following Chuseok.
From June 2, just before the Lee Jae-myung administration took office, to the most recent data on the 20th of this month, Seoul's apartment sale price index rose 4.6%. In the 19 weeks immediately after the Moon Jae-in administration took office, the increase in Seoul apartment prices was 2.3%. On online real estate communities, people say it is not "Moon Jae-in administration 'season 2'" but "double speed." Compared with the roughly five-month increase (2.02%) before the Lee Jae-myung administration took office, the rate of increase more than doubled.
By district, apartment prices in Seongdong District surged 10.94% over the same period. Songpa District rose 8.80%, Mapo District 8.13%, and Gwangjin District 8.09%. Yangcheon, Gangdong, and Yongsan districts also saw gains in the 6% range, and Seocho District recorded an increase in the 5% range. These areas all surpassed their previous peaks at the end of Oct. In Gyeonggi Province, Bundang District in Seongnam and Gwacheon City led the market. During this period, Bundang District rose 11.15% and Gwacheon City 8.63% in home prices.
The main reason cited for the sharp rise in Seoul apartment prices after the current administration took office is the increase in market liquidity. Although the high interest rate stance continued from 2022 as COVID-19 subsided, central banks around the world shifted to a policy of cutting benchmark interest rates due to concerns about an economic downturn.
Beginning last Oct., the Bank of Korea cut the benchmark rate four times from 3.50% a year to 2.50%. When interest rates fall, liquidity in the market increases, leading to higher asset prices such as real estate, stocks, and coins.
The fact that real estate prices rose sharply under progressive administrations that pursued regulation-centered policies is also stoking buying sentiment. During the Moon Jae-in administration, Seoul apartment prices rose 62.2% (based on the Korea Real Estate Board (KREB)), and during the Roh Moo-hyun administration, which lasted five years from 2003, they jumped 56.6%. In contrast, during the Yoon Suk-yeol administration (-4.9%) and the Lee Myung-bak administration (-3.2%), Seoul apartment prices fell. Under the Park Geun-hye administration, Seoul apartment prices did rise, but the increase was relatively modest at 9.9%.