Seoul's apartment prices have risen for 85 consecutive weeks, marking the longest increase on record, according to the Korea Real Estate Agency. Despite declines in the three districts of Gangnam, the overall rise in Seoul has not halted. This trend reflects both adjustments in high-priced areas and increases in the outskirts. While the drop in Gangnam may lower the average rise in Seoul, it does not alleviate the burden for those seeking homes in the outer regions.
Changes in high-priced areas are evident. As of September 21, the Korea Real Estate Agency reported that Gangnam and Seocho have seen declines for seven weeks, while Songpa has dropped for three weeks. The weekly increase in Mapo decreased from 0.24% on September 7 to 0.15% on September 14, and further to 0.06% on September 21. Yongsan also reduced its increase for two consecutive weeks, approaching a stable range. The cooling of these previously hot markets is noteworthy. However, it is important to distinguish between a slowdown in price increases and actual price declines.
According to KB's survey, Yongsan maintained stability during the same period, while Mapo initially increased its rise before tapering off. Songpa also saw a slight increase on September 21. The intensity and trajectory of adjustments vary across statistics. It is premature to conclude that the weakening trends in Yongsan and Mapo will lead to a widespread decline across Seoul. The mere reduction in asking prices for some high-end complexes does not guarantee overall market stability.
Conversely, the Korea Real Estate Agency reported increases on September 21 in Seodaemun (0.44%), Dongdaemun (0.39%), and Nowon (0.37%). Households seeking relatively affordable homes are finding that even these options are becoming more expensive. The numerical disparities between regions translate into higher down payments and debts for those preparing to purchase a home. The narrowing gap between prices in Gangnam and the outskirts does not equate to a reduction in housing costs for ordinary residents.
President Lee Jae-myung remarked on September 18 regarding the decline in Gangnam and the rise in the outskirts, suggesting that “a kind of leveling process seems to be underway.” The Blue House clarified that this statement was meant to explain price trends and acknowledged the heavy burden of rising prices outside Gangnam. Nonetheless, there remains skepticism about whether the President perceives the weight of rising prices in the outskirts differently from the public. If the trend of increasing prices in the outskirts and rental costs continues, what residents will feel is more akin to an 'upward leveling' of housing costs rather than a flattening of prices.
Renters are also incurring waiting costs. According to the Korea Real Estate Agency, the average rent for Seoul apartments has risen by 8.00% this year, closely approaching the 8.09% increase in sales prices. Even if potential buyers delay purchases until prices stabilize, they must still worry about the security deposits for upcoming leases. Rising rental prices may prompt purchases, while increasing home prices can obstruct them. News of adjustments in high-end housing alone is unlikely to alleviate this anxiety.
The adjustment in Gangnam could lower the expected prices in other regions. However, the housing instability during this waiting period must be addressed through policy. From January to July this year, the completion of new apartments in Seoul decreased by 48.7% compared to the same period last year. Although construction starts increased by 36.1%, it takes time for these units to be ready for occupancy. The government and the Seoul city administration must prioritize resolving delays in occupancy in areas with significant rental anxiety and ensure timely support for households needing public rental assistance and rent subsidies.
The report card on housing price policies should reflect not only the average prices in Seoul but also the transaction prices of mid- to low-priced homes and the burdens of new and renewed leases. The progress on supply that the President receives weekly must be verified through actual occupancy and reductions in housing costs. Even when the streak of 85 weeks ends, if prices and rents in the outskirts continue to rise, housing instability will persist. What the government must expedite is the day when ordinary households can find homes they can afford.
* This article has been translated by AI.
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