Rising Apartment Prices in Seoul Show No Signs of Slowing

Seoul's apartment prices continue their upward climb, despite regulatory measures like the expansion of land transaction permit zones, which have significantly reduced transaction volumes. Apartment prices have surged for 13 consecutive weeks across all 23 districts, including the tightly controlled "Gangnam 3" districts (Gangnam, Seocho, Songpa) and Yongsan.

The persistent price increases are fueled by concerns over housing supply shortages and expectations of future interest rate cuts. Market analysts forecast that Seoul's apartment prices will maintain their upward momentum in the long term.

Weekly Apartment Price Metrics

Data from the Korea Real Estate Board reveals a 0.09% increase in Seoul's weekly apartment sale price index during the fourth week of April, slightly up from 0.08% the previous week.

Gangnam District led the gains with a 0.19% rise, driven by demand in Daechi and Apgujeong-dong. Seocho District saw a 0.18% increase, particularly in Banpo and Jamwon-dong, while Songpa District also increased by 0.18% due to interest in Jamsil and Sincheon-dong. Yangcheon District experienced a 0.14% gain, mainly in Mok and Sinjeong-dong, and Gangdong's apartment prices rose by 0.11%, spearheaded by large complexes in Godeok and Sangil-dong.

Other districts with notable increases include Mapo (0.17%), due to favorable conditions in Yeomri and Ahyeon-dong; Seongdong (0.16%), centered on Seongsu and Geumho-dong; Yongsan (0.15%), with demand in Ichon and Hannam-dong; Gwangjin (0.09%), focused on complexes in Guui and Jayang-dong; and Jongno (0.07%), led by Hongpa and Changsin-dong.

A Korea Real Estate Board representative stated, “Asking prices for key redevelopment complexes have risen, with sales occurring at higher values. However, buyer caution remains in some areas and complexes, but the overall trend in Seoul continues to rise.”

Record-Breaking Transactions in Gangnam

Gangnam has seen record-breaking apartment transactions recently. According to the real transaction price disclosure system by the Ministry of Land, Infrastructure, and Transport, a unit in "Raemian One Bailey" (84 square meters) in Seocho's Banpo-dong sold for KRW 7 billion ($5.3 million) on March 3, marking a new all-time high. This sale was the first instance of a standard-sized apartment (84 square meters) exceeding KRW 2 billion per 3.3 square meters in value.

In February, a unit in "Jamsil Els" (84 square meters) in Songpa's Jamsil-dong sold for KRW 2.88 billion, an increase of KRW 220 million from the previous transaction. Additionally, "Raemian Daechi Palace" (84 square meters) in Gangnam's Daechi-dong sold for KRW 4 billion a day after its removal from the land transaction permit zone, setting another record. Analysts link these price hikes to limited housing supply and sustained demand.

Growing Supply Concerns

Concerns about housing supply shortages are intensifying. Real Estate R114 data indicates that Seoul will face a significant supply shortfall next year, with only 9,640 units expected, compared to 37,681 units projected for this year.

Experts stress the urgent need to address this supply issue. Kwon Dae-jung, a professor at Sogang University's Graduate School of Real Estate Science, said, “Urban areas lack land for new housing, making redevelopment of outdated housing crucial to expanding stock.” He added, “Relaxing regulations on urban redevelopment and reconstruction is necessary to increase housing supply.”

Kwon also warned of potential future impacts from sustained supply constraints. “Without new housing supply, rental and lease prices will rise, leading to further increases in apartment sale prices. Policymakers must aggressively pursue housing supply expansion strategies,” he concluded.

Conclusion

With constrained housing supply and strong demand, Seoul's apartment prices are expected to continue rising. Market participants and policymakers are urged to take proactive measures to address supply challenges and stabilize the housing market. Without decisive action, the capital's housing market could face mounting pressure in the coming months.