In the first quarter of this year, apartment prices on the outskirts of Seoul, including Gwanak and Seongbuk districts, rose in the 3% range, while the three Gangnam districts (Gangnam, Seocho, and Songpa) saw lower gains of 0% to 1%.
According to the Korea Real Estate Board (REB)'s Weekly Apartment Price Trend Survey on the 3rd, the apartment sale price index for Gwanak District in the fourth week of March (as of Mar. 23) was 101.2, up 3.31% from the end of last year. Gwanak ranked No. 1 in first-quarter growth among Seoul's 25 districts. It was followed by Seongbuk (3.30%), Yeongdeungpo (3.08%), and Gangseo (3.05%).
By contrast, apartment prices in Gangnam District rose only 0.11% over the same period. Songpa and Seocho climbed 1.02% and 1.12%, respectively. Week over week, all three Gangnam districts posted declines. Their apartment sale price indexes also fell below 100. An apartment sale price index below 100 means there are more people looking to sell than to buy. The surge in urgent listings centered on the Gangnam area was driven by the looming end of the temporary suspension of heavier capital gains taxes on multiple-home owners.
A common feature of areas with large price increases this year is that they are primarily where apartments priced at 1.5 billion won or less are located. Demand from end-users concentrated on apartments at or below 1.5 billion won, for which a mortgage loan can be taken out up to the maximum limit (600 million won). Analysts also note that decreases in jeonse supply, a lack of new supply, and FOMO (fear of missing out) are pushing up prices in areas that rose relatively less last year.
A staffer at a real estate agency in Gwanak District said, "It wasn't as pronounced as in Gangnam, but after the Oct. 10 and Oct. 15 real estate policy announcements, prices around Gwanak also trended upward," adding, "Then around the Lunar New Year holiday this year, inquiries from buyers began to increase, and because it is one of the few places where you can buy an apartment in the 20-pyeong range for around 1 billion won, many newlyweds are inquiring."
There are also more cases setting new record highs, surpassing previous peaks that had not recovered for years. A 59-square-meter unit in Gwanak Dream Town (3,544 households; move-in 2003) in Bongcheon-dong, Gwanak District, set a record on the 7th of last month with a transaction at 1.12 billion won. That was more than 200 million won above the prior peak of around 900 million won. A 59-square-meter unit in Raemian Gireum Centerpiece in Gireum-dong, Seongbuk District, which transacted at 1.24 billion won in Aug. 2021, rose into the 1.2 billion won range last September and then traded at 1.54 billion won in March this year.
Apartment transaction volumes are also surging in Seoul's outlying areas. According to the Seoul Real Estate Information Plaza, apartment transactions in Gwanak District jumped more than twofold from 99 in November last year to 218 in February this year. Seongbuk rose from 195 to 405 over the same period, and Yeongdeungpo from 109 to 312, roughly doubling and tripling, respectively. Gangnam (268→149), Seocho (428→266), and Songpa (428→266) saw apartment transactions halved.
The problem is that if prices in working-class residential areas also rise steeply, housing stability for the middle class could be shaken. An academic who requested anonymity said, "No matter how much Gangnam prices fall, it's pie in the sky for the middle class," adding, "If prices for apartments at or below 1.5 billion won keep rising, the burden on the middle class to buy a home will inevitably grow, and jeonse and monthly rents will also keep being pushed up, deepening housing instability for working people."