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Average Seoul apartment price up 40% under Moon

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This aerial photo taken on Nov 19, 2018 shows a general view of high-rise apartment buildings in South Korea. (ED JONES / AFP)

Average Seoul apartment price up 40% under Moon

The average market price of Seoul apartments has soared 40 per cent in the past 30 months, notwithstanding the incumbent Moon Jae-in administration’s series of price-curbing measures, data showed on Tuesday.

A survey conducted by housing information provider Real Estate 114 on 241,621 apartments said the average sale price of Seoul apartments stood at 823.76 million won ($690,000) as of last week, up 40.8 per cent from 585.24 million won in the first half of 2017.

It was in May that year that President Moon took office in a snap election to fill in the vacuum due to his predecessor Park Geun-hye’s impeachment.

The average transaction price also climbed 238.52 million won during the given period.

Since then, the Moon administration has effectuated intensive measures to curb real estate prices – on August 2, 2017; September 13, 2018; and price ceiling on new apartments this year.

Even after the major regulations, the pace of apartment prices have risen steeply this year, marking an 18.3 per cent rise from last year, data showed.

By district, it was the affluent Gangnam-gu which has seen the steepest rise in apartment prices, up 53.3 per cent from the first half of 2017. The average transaction price came to 1.82 billion won.

Excluding Gangnam-gu, however, it was the underdeveloped northern part of the city which saw a steep rise.

The average apartment price in downtown Jongno-gu rose to 834.92 million won, up 51.9 per cent from 549.62 million won as of June 2017.

Next were Gwangjin-gu, Yongsan-gu and Seodaemun-gu – all marking an increase rate of more than 50 per cent during the same period.

Songpa-gu, Seocho-gu and Gangdong-gu – the other three districts in the so-called affluent Big Four or the Gangnam Belt – remained relatively moderate in the pace of price change.

“The young generation tends to prefer newly built apartments [over conventionally prestigious ones in the Gangnam zone],” said Real Estate 114 research head Kim Eun-jin.

“Such a tendency has narrowed the gap between new residential complexes in Gangbuk and the old ones in Gangnam.”

Taking up the largest part of apartment buyers this year were those in their 30s, accounting for 31.2 per cent of transactions as of October, the Ministry of Land, Infrastructure and Transport said.

With most being first-time homebuyers, these consumers are relatively free from the government’s enhanced loan regulations – which mostly target speculative buying and multiple home ownership.

Experts, however, also expressed concerns that this may pose a potential financial risk for the corresponding age group.

“Considering the comprehensive real estate tax effect in the year-end, the upcoming hike in possession tax, and the government’s supplementary measures, it is unlikely that Seoul’s apartment prices will continue to rise as steeply as before,” said KB Kookmin Bank senior real estate analyst Park Won-gap.

THE KOREA HERALD/ASIA NEWS NETWORK

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