After the government's June 27 loan regulations and Oct. 15 real estate measures, the price growth rate of small apartments outpaced that of mid- to large-sized units. Analysts say that as prices for mid- to large-sized apartments have surged to burdensome levels amid the recent spike in home prices, buyers are flocking to smaller units. Even for small apartments, the preference is strengthening for a "smart single home" located along the Han River or in prime stationside areas.
According to the Korea Real Estate Board (REB) on the 15th, in the first week of January (as of the 5th), the sale price growth rate for small apartments in Seoul with exclusive areas over 40 square meters and up to 60 square meters was 0.24%, higher than mid-sized units of over 60 square meters and up to 85 square meters (0.18%) and mid- to large-sized units of over 85 square meters and up to 102 square meters (0.07%).
This trend has become pronounced since the second half of last year. In the third quarter of last year, the sale price growth rate for small apartments in Seoul was 2.15%, the highest among all size bands. Prices for mid-sized and mid- to large-sized apartments rose 1.93% and 2.06%, respectively. In the fourth quarter, the pace of increase steepened, with small apartment sale prices jumping 3.30% in three months. Likewise, they outpaced the sale price growth rates of mid-sized and mid- to large-sized apartments. In the first half, both the first and second quarters saw stronger gains for mid-sized and mid- to large-sized apartments.
Strength in small apartment prices typically appears in an upswinging market. During the Moon Jae-in administration, when home prices surged as much as under the current government, the price growth rate of small apartments was overwhelmingly higher. In 2020 and 2021, the sale price growth rates for small apartments in Seoul were 1.57% and 7.70%, respectively, surpassing mid-sized apartments (0.89%, 6.25%).
Nam Hyeok-woo of Woori Bank Real Estate Research Institute said, "In the early stage of an upswing, demand concentrates on 30-pyeong units that are somewhat easier for actual occupancy. As apartment prices keep rising, more people try to buy even smaller sizes within their available budgets, pushing prices up faster," adding, "Even for 10-pyeong units, buyers are actively trying to get into top-tier locations."
At Jamsil Els in Jamsil-dong, Songpa District, Seoul, a 59-square-meter unit that had a transaction at 2.2 billion won in January last year sold for 3.1 billion won in November, rising by about 900 million won on an actual transaction basis, while an 84-square-meter unit rose by 600 million won from 2.7 billion won to 3.3 billion won. Even 10-pyeong units are setting new record highs. A 37-square-meter unit at Ricenz in Jamsil-dong traded at 1.76 billion won last month, marking a record. As recently as January, it traded in the 900 million to 1 billion won range. A 39-square-meter unit at Helio City in Garak-dong, Songpa District, hit a peak price with a transaction at 1.79 billion won in November last year.
Loan regulations also had an effect. A certified real estate agent in Songpa District, Seoul, said, "For apartments over 2.5 billion won, loans are only available up to 200 million won, which barely covers taxes and brokerage fees," adding, "Many who waited to buy a 30-pyeong unit are lowering their sights to 25 pyeong because their loans are blocked."
There is also analysis that even 20-pyeong units in new apartments are not too small for a family of four, so buyers do not hesitate to lower their expectations. Small apartments built before the 2000s were mostly two bedrooms and one bathroom, but nowadays even 59 square meters typically have three bedrooms and two bathrooms, and some include a dressing room.