Seoul's apartment prices have seen a slowdown in growth for the second consecutive week, with notable regional disparities emerging. While the Gangnam districts have experienced a uniform decline due to tax and loan regulations, the relatively affordable northern areas are witnessing an influx of genuine demand, leading to continued price increases.
Gangnam Districts Decline While Northern Areas Rise
According to the Korea Real Estate Agency's report on weekly apartment price trends for the first week of September (as of September 7), Seoul's apartment sale prices rose by 0.20% compared to the previous week, a decrease of 0.02 percentage points from the prior week's 0.22%, marking a second week of reduced growth.
In Seoul, the northern district of Gangbuk saw the highest increase at 0.46%, driven by small to mid-sized complexes in the Mia and Beon-dong areas. Dobong and Seodaemun districts followed with increases of 0.43% and 0.42%, respectively, highlighting the strength of the northern region.
Despite challenging loan conditions leading to a slowdown in transactions, the lack of available sale and rental listings has prevented significant drops in asking prices. Areas near subway stations with apartments priced under 1.5 billion won ($1.1 million) continue to attract genuine demand due to their relative affordability.
Conversely, Gangnam saw a decline of 0.35%, while Seocho dropped by 0.30%, continuing a five-week downward trend since the announcement of tax reforms last month. Songpa, which had seen a slight increase of 0.01% last week, also turned negative this week with a 0.02% drop.
The reduction in long-term holding tax rates and the introduction of new limits on long-term residence income deductions appear to have increased selling pressure on high-priced homes. This trend is particularly evident in older apartments in need of reconstruction, where living conditions are relatively poor.
The decline in Songpa is interpreted as a spreading adjustment in prices that began in the Gangnam area. Localized price corrections in the Han River belt, including Apgujeong and Banpo, are influencing homeowners in Songpa to lower their asking prices as they consider moving to Gangnam or Seocho.
Demand Shifts to Affordable Areas: 'Circular Trading' Expected to Continue
The regional differentiation in Seoul's housing prices is expected to persist for the time being. The high price levels, tax burdens, and loan regulations in the main Han River belt have dampened buying interest, while demand is likely to shift to the more affordable outer areas of Seoul and non-regulated regions in Gyeonggi Province.
In the Han River belt, some original members of redevelopment projects are beginning to list their properties due to concerns over future property taxes and capital gains taxes. Loan restrictions from financial institutions remain in place, limiting the influx of demand from lower-priced areas to higher-priced ones.
Nam Hyuk-woo, a researcher at Woori Bank, stated, "With the expansion of total loan management by 3% and the easing of income qualification requirements for mortgage loans, favorable financial policies are expected for first-time homebuyers in their 20s and 30s. The 'circular trading phenomenon' in outer Seoul and non-regulated areas in Gyeonggi Province, with prices under 1 billion won, is likely to continue for the foreseeable future."
As the fall moving season approaches, the shortage of rental listings is expected to increase the financial burden on tenants. There are concerns that not only sale prices but also rental prices, including jeonse (long-term lease) and wolse (monthly rent), may rise in the outer areas of Seoul where genuine demand is concentrated.
Kwon Dae-jung, a professor of economics and real estate at Hansung University, noted, "As demand increases while housing supply remains insufficient, prices will inevitably face upward pressure. The government's tightening of residency requirements for non-occupied homes and land transaction permit zones is further limiting the supply of jeonse, and monthly rents are likely to continue rising, which could lead to significant challenges for tenants this fall."
He added, "The potential for increased taxation is also contributing to a shift of tax burdens onto rental prices, suggesting that rental prices may continue to rise from this fall into the first half of next year."
* This article has been translated by AI.
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