Apartment Prices Drop in Gangnam, But Small Units See Record Sales

Apartment prices in the Gangnam Districts (Gangnam, Seocho, and Songpa) have been declining for several weeks, yet some small and ultra-small apartments are experiencing record sales. Despite concerns over tax burdens on high-priced homes and lending restrictions, demand for smaller units is rising as buyers seek to enjoy the amenities of the Gangnam area.

According to the Ministry of Land, Infrastructure and Transport's real transaction disclosure system, a 51㎡ unit at the Samik Daechung Apartment in Gaepo-dong sold for 2.1 billion won on October 6, setting a new record. This price is 500 million won higher than the previous peak of 1.6 billion won in 2022. Similarly, a 51㎡ unit at the Gangnam Jagok Hillstate in Jagok-dong sold for 1.385 billion won on October 15, also marking a new high.

Record sales have also been reported in Songpa District. A 59㎡ unit at the Jamsil Olympic Park I-Park in Pungnap-dong sold for 2.33 billion won on October 5, setting a new record. Additionally, a 39㎡ unit at Munjeong City Young in Munjeong-dong sold for 1.25 billion won on September 21, maintaining a high price level.

This trend contrasts with the overall decline in apartment prices in the Gangnam Districts. The Korea Real Estate Agency reported that as of the third week of October (as of the 19th), the sale prices in Gangnam and Seocho fell by 0.31% and 0.32%, respectively, marking the 11th consecutive week of decline. Songpa also saw a decrease of 0.13%, continuing its downward trend for seven weeks.

The average transaction price for small and ultra-small apartments has also increased. Data from the Ministry of Land indicates that the average transaction price for ultra-small apartments (under 40㎡) in the Gangnam Districts rose from 661 million won in August to 899.5 million won in September, a 36.1% increase. For small apartments (over 40㎡ and up to 60㎡), the average price increased by 10.6%, from 1.939 billion won to 2.145 billion won during the same period.

In contrast, large apartments (over 85㎡) saw a smaller increase of 3.5%, rising from 3.788 billion won to 3.922 billion won. However, average transaction prices can vary based on the specific complexes and their respective floors and price ranges.

Analysts suggest that buyers are turning to small apartments to maintain their location in Gangnam while lowering their total purchase costs. With limited funds available for home purchases due to lending limits, many buyers prioritize accessibility to workplaces and convenience over larger living spaces, making small apartments an attractive option.

Shin Bo-yeon, a professor at Sejong University’s Department of Real Estate AI Convergence, stated, "Gangnam is a region where businesses and lifestyle facilities are concentrated, leading to consistent demand for residence. In a situation where funding is limited due to lending caps, people who want to enjoy the benefits of living in Gangnam are purchasing small apartments that fit their budgets."

Future tax reforms will also be a variable affecting demand across different price ranges. Increased tax burdens on high-priced apartments could dampen buyer sentiment. However, the specific impact will depend on the prices of individual homes and the finalized details of the tax reforms.

Professor Shin added, "High-priced apartments in Gangnam are likely to continue adjusting in price until the tax reform proposals are finalized, while relatively lower-tax small homes are expected to maintain their upward trend due to ongoing demand for the location and amenities of Gangnam."