Southern Gyeonggi Province Leads Housing Price Growth as Seoul Slows

Seoul's apartment prices have slowed for two consecutive weeks, while areas in Southern Gyeonggi Province, including Suwon's Youngtong, Yongin's Suji, and Seongnam's Sujeong, are leading the price increases in the metropolitan area. This trend is attributed to the movement of genuine buyers, pushed out by soaring prices and loan regulations in Seoul, toward Southern Gyeonggi, which has strong transportation and industrial infrastructure. Experts predict that the upcoming tax reform, which will increase the burden on high-priced homes, may further drive demand toward Southern Gyeonggi, where housing prices and ownership costs are relatively lower.

Seoul's Price Growth Slows for Two Weeks; Gangnam Buyer Sentiment Drops
According to the KB Real Estate report released on August 7, as of August 3, the national average apartment sale price increased by 0.08% from the previous week. The metropolitan area saw a 0.17% rise, with Seoul at 0.23%, Gyeonggi at 0.17%, and Incheon at 0.01%.

While both the national and metropolitan areas maintained an upward trend, the rate of increase has diminished compared to the previous week. The national apartment price growth rate decreased from 0.11% on July 27 to 0.08% on August 3, while the metropolitan area dropped from 0.22% to 0.17%.

Seoul's apartment price growth rate has slowed for two consecutive weeks, falling from 0.34% on July 13 and 20 to 0.32% on July 27 and 0.23% on August 3. The summer vacation season, combined with fatigue from recent price increases and uncertainty surrounding tax reforms, has led both buyers and sellers to adopt a wait-and-see approach.

Notably, the price growth rates in high-end areas like Yongsan and Seocho were only 0.01% and 0.02%, respectively. While prices in central Seoul are weakening, mid- to low-priced areas are showing relative strength.

Buyer sentiment has also declined. The Seoul Buyer Advantage Index fell from 84.6 to 81.9, a drop of 2.7 points. A score above 100 indicates more buyers than sellers, while a score below 100 indicates the opposite.

Regionally, the index for the 14 districts in northern Seoul dropped from 91.0 to 89.4, a decrease of 1.6 points, while the 11 districts in southern Seoul fell from 78.9 to 75.2, a drop of 3.7 points. The decline in the southern region was more than double that of the northern region. Although Seoul's apartment prices are still rising, the demand for aggressive buying appears to be weakening.

Youngtong, Suji, and Sujeong See Strong Price Increases; Rental Prices Rise Too
In contrast, the southern regions of Gyeonggi Province continue to show strength. Suwon's Youngtong district recorded the highest growth rate in the metropolitan area at 0.91% over the week. Seongnam's Sujeong and Yongin's Suji also saw increases of 0.63%, while Suwon's Jangan district rose by 0.60%, and Hwaseong's Byeongjeom district increased by 0.57%.

Youngtong's growth is driven by major complexes in Mangpo-dong, identified as a residential area for the semiconductor belt, and remodeling projects in Yeongtong-dong. However, as sellers continue to raise prices, inquiries from buyers have decreased, and a wait-and-see atmosphere has intensified.

As the financial burden for purchasing apartments in Seoul increases, genuine buyers are moving to the southern regions, which offer commuting options and have their own industrial and transportation advantages.

The strength in Southern Gyeonggi is also reflected in the rental market. Overall, Gyeonggi's apartment rental prices rose by 0.13%, with Suji increasing by 0.43% and Byeongjeom by 0.42%. Suwon's Jangan and Seongnam's Sujeong also saw increases of 0.31% and 0.26%, respectively. The influx of both investment and genuine residential demand into these areas is contributing to rising sale and rental prices.

Tax Reform May Further Strengthen Southern Region; Watch for Demand Shift from Seoul
Market observers are paying close attention to the potential for increased genuine demand in Southern Gyeonggi following the implementation of the tax reform. As the burden on high-priced homes and non-resident homeowners increases, and the capital gains tax exemptions for long-term holders decrease, demand that has either sold or opted out of purchasing high-priced homes in Seoul may shift to relatively lower-priced areas within the metropolitan area.

Regions such as Yongin's Suji, Seongnam's Bundang and Sujeong, and Suwon's Youngtong, which have good accessibility to Seoul and are preferred for living, are expected to be primary targets for this demand shift. These areas not only serve as alternatives to Seoul but also possess their own price-increasing factors, such as the semiconductor industry and extensive transportation networks.

However, the uncertainty surrounding the tax reform could also dampen overall housing transactions. If sellers of high-priced homes in Seoul do not immediately transition to buyers in Gyeonggi, and both selling and buying are postponed, the southern region may also experience a wait-and-see atmosphere, particularly in areas that have seen rapid price increases. In fact, the Gyeonggi Buyer Advantage Index has also dropped from 60.4 to 59.0, indicating a more cautious buyer sentiment despite rising prices.

An industry insider noted, "The recent rise in Southern Gyeonggi is the result of a combination of price differences with Seoul, loan limits, and industrial and transportation advantages. If the tax reform increases the burden of holding high-priced homes in Seoul, we may see a broader shift in demand to the southern regions, which are more affordable and accessible for commuting to Seoul. However, in areas where prices have already risen quickly, buyer resistance to prices is also growing, so we need to monitor actual transaction volumes and demand shifts after the tax reform."