March Seoul Apartment Transactions Exceed 10,000, Hitting 4-Year 8-Month Peak

# Surge in Seoul Apartment Transactions After Temporary Lifting of Real Estate Permit Zones, Highest Since July 2020 ## Expansion of Real Estate Permit Zones Spurs Decline in Overall Transactions & Rise in High-Value Deals in Areas like Gangnam, Seocho, and Ma-Yong-Sung SEOUL — Seoul apartment transactions have surged, exceeding 10,000 units in March, following the temporary lift of real estate permit zones (토지거래허가구역 or 토허구역 in Korean). Contrary to the trend of declining transactions since the expansion of permit zones, hotspot areas like Gangnam, Seocho, and Mapo-Yong-Sung (Ma-Yong-Sung for Mapo, Yongsan, and Seongdong Districts) saw an uptick in higher-priced deals. According to the Seoul Real Estate Information Plaza, Seoul apartment transactions in March reached 10,006 units by April 18, surpassing the 10,000 mark. This surge outpaced the 9,226 transactions recorded in July of the previous year, a period marked by a rush before the implementation of the second phase of DSR (Debt Service Ratio) rules, and marked the highest monthly figure since the peak of 11,154 transactions in July 2020. ## Transactions Increase Despite Rising Interest Rates The Seoul housing market saw a steep decline in transactions starting in the second half of 2021 as interest rates increased. By the latter half of 2022, transactions dropped below the 1,000-unit mark amid rapid “big step” rate hikes, indicating a significant transaction freeze. The market remained stagnant due to prolonged high-interest rates and the fallout from rental fraud scandals. Even with stricter lending regulations introduced in September last year, volumes hovered around 3,000 units. However, easing restrictions on Gangnam’s permit zones in February led to an increase in transactions, reaching 6,562 units that month. March saw totals exceed 9,000 for the first time in years. This momentum slowed after March 24 when Seoul expanded permit zones to include the three Gangnam districts (Gangnam, Seocho, and Songpa) and Yongsan. Reported transactions up to April 18 halved from March to 4,941 units. April’s transaction volume is projected to stabilize around the 6,000-unit mark, comparable to February’s results, based on a full reporting cycle. ## Impact of Permit Zones on Transactions and Price Trends With the permit zone expansion, transactions in Gangnam and Yongsan sharply declined to an average of about 100 units each in April. In contrast, peripheral districts like No-Do-Gang (Nowon, Dobong, and Gangbuk) and Geum-Gwan-Gu (Geumcheon, Gwanak, and Guro) maintained or exceeded February’s transaction volumes. The expansion led to a reduction in the proportion of transactions at rising prices. Real Estate Research firm R114 analysis, based on Korea’s Ministry of Land data, shows a drop in higher-priced transactions to 56% after March 24, compared to 60% during the temporary easing period from February 13 to March 23. Yet, premium-price transactions rose in Gangnam and Seocho despite slumping transaction volumes. In Gangnam District, the share rose from 71% during the easing period to 73% post-expansion. Seocho saw a rise to 75%. This reflects sustained demand for luxury and redevelopment-focused properties, even amid a contracting market. High-value deals in Gangnam indicate a robust market: in Apgujeong, a redevelopment hub, a 183.41 square meter unit in Hyundai Apartment’s 11th Complex set a record at KRW 9.95 billion late last month. Songpa District, initially boosted by the easing phase, saw rising transaction shares fall from 77% to 66%. ## Northern Seoul Hotspots See Increased High-Price Transactions Outside the Gangnam belt, northern Seoul districts showed higher rising-price transaction ratios. For instance, Mapo District’s ratio rose from 62% during February-March to 70% post-expansion. Similarly, Seongdong increased from 59% to 64%, Yongsan from 62% to 67%, and Yangcheon from 60% to 70%, showcasing a "balloon effect" where demand shifts to appealing non-Gangnam areas. Conversely, districts like Nowon and Dobong saw declines in rising-price ratios (from 49% to 48% and 51% to 48%, respectively). In traditionally affordable northern districts like Geumcheon (26%), Jongno (33%), Jungnang (40%), and Seodaemun (49%), fewer than half of transactions involved rising prices. ## Outlook for the Seoul Property Market “Gangnam apartment prices are picking up in April following a brief lull from the permit-zone expansion, suggesting early signs of recovery,” said Yoon Ji-hae, Head of Proptech Research Lab at Real Estate R114. She added, “Despite volatility tied to policy changes under the new administration post-election, high-interest rates and limited supply could see Seoul apartment prices continue to rise into the latter half of the year.” sms@yna.co.kr