The sale prices of Seoul row houses, which rose more than 5% for the full year last year, turned downward this year. As the government raised the pressure on rental business operators and multiple-home owners, a market that seemed to be shaking off the shock of rental fraud has frozen again.
According to the real estate industry on the 24th, the Korea Real Estate Board (REB) released on the 19th a monthly national dwellings price trend survey showing that in January, the sale price index for Seoul row houses such as low-rise apartment, multi-family, and mansions fell 0.79% from the previous month.
Seoul row house sale prices rose 5.26% last year, a 10-year record high. That is higher than in 2021 (4.13%), when prices in the greater Seoul area surged. As apartment prices climbed steeply, the buying momentum in the low-rise apartment market also began to revive. The government's expansion at the end of 2024 of the scope of non-apartment dwellings recognized as no-home for policy purposes also proved effective in revitalizing the low-rise apartment market. Expectations for redevelopment grew thanks to Seoul City's support policies for maintenance projects such as the fast-track integrated plan and the Moa Town initiative. In areas where redevelopment is gaining traction, such as Seongsu and Hannam-dong, low-rise apartment prices within designated maintenance zones jumped more than 50%, with some transaction in the 3 billion to 5 billion won range.
However, sentiment began to shift after the Oct. 15 real estate measures were released last year. Although the owner-occupancy requirement was avoided, the entire city of Seoul was designated as an area subject to adjustment and as an overheated speculation district, so the same loan and funding regulations as apartments applied to low-rise apartments, and investment demand quickly exited. Making matters worse, the government's signal of tighter regulations on rental business operators and multiple-home owners acted as a headwind. As rental demand aimed at buying low-rise apartments and collecting rent for revenue weakened, sale transactions are plunging. According to the Ministry of Land, Infrastructure and Transport's actual transaction disclosure system, from the 1st to the 23rd of this month, the number of Seoul row house and multi-family sale transaction stood at 663 as of the previous day, about 20% of the previous month's 3,218. It is also low compared with the same month a year earlier (2,229).
Nam Hyeok-woo of the Woori Bank Real Estate Research Institute said, "The rental business operator system itself is for non-apartments, but when the government hinted at reducing tax benefits and tightening loan regulations, the low-rise apartment market appears to have been hit," adding, "As investment demand shrank, transactions decreased, and this trend will continue for the time being." A specialist who requested anonymity said, "Low-rise apartment markets in Seoul and Incheon are particularly influenced by political themes," adding, "Political uncertainty appears to have affected the decrease in transactions, as plans and the pace of maintenance projects can vary depending on who becomes Seoul mayor."