As the scarcity of new apartments in Seoul increases, the prices of apartment rights and occupancy rights are rising sharply even before residents move in. This trend is attributed to a decrease in available units and a simultaneous increase in housing prices, leading to heightened demand for securing new apartments in advance.
According to the Ministry of Land, Infrastructure and Transport's real transaction disclosure system, a total of 552 transactions for apartment rights and occupancy rights occurred in Seoul from January to June this year. During the same period, the number of new apartment units available for occupancy dropped by 43.9%, from 30,428 units last year to 17,061 units this year, further increasing the scarcity of new builds.
The most frequently traded development among the apartment rights and occupancy rights this year was the Seoul Won I-Park, part of the Gwangwoon University Station development project.
The 84-square-meter unit at Seoul Won I-Park was sold for 1.4 billion won (approximately $14 million) in December last year, but the price surged to 1.81 billion won (about $18.1 million) in May this year, marking an increase of about 400 million won. The 112-square-meter unit was sold for 2.02 billion won (around $20.2 million) in June, which is about 200 million won higher than the highest price at the time of its sale in 2024.
Initially, the Seoul Won I-Park faced criticism for its high selling price and some unsold units. However, as the supply of new apartments in Seoul dwindled and expectations for the Gwangwoon University Station development grew, market evaluations shifted. Industry analysts suggest that a project once labeled as 'overpriced' is now being reassessed as a 'value-for-money new build.'
In developments nearing completion, price increases have been even more pronounced. The 84-square-meter unit at The H Banpo, set to be completed in September, was sold for 3.4 billion won (approximately $34 million) in March last year, and in April this year, it sold for 3.69 billion won (about $36.9 million), reflecting an increase of about 300 million won in just over a year. This has created a premium of up to 1.7 billion won compared to the initial selling price, which ranged from 1.94 billion won to 2.24 billion won.
In completed developments, both a decrease in transaction volume and an increase in prices have been observed. The Dongdaemun-gu I-Park Jiah, which began occupancy in November last year, recorded 109 transactions from January to November last year, but only 11 transactions from January to June this year. Meanwhile, the average transaction price for the 84-square-meter unit rose from 1.315 billion won (approximately $13.15 million) in February last year to 1.83 billion won (about $18.3 million) in May this year, indicating that while transactions have decreased, prices have actually increased.
Similar trends are evident at the Gwangjin-gu Gangbyeon Station Central I-Park, which is also set to complete in November. The 84-square-meter unit rose from 1.4938 billion won (around $14.9 million) in June last year to 2.25 billion won (approximately $22.5 million) in June this year, an increase of about 760 million won. However, this development has only seen three transactions, limiting the ability to view this as a definitive trend.
In the Gangnam area, the value of the location has driven price increases. The occupancy rights for the 111-square-meter unit at Cheongdam Leel rose from 7 billion won (approximately $70 million) last year to 8.3 billion won (about $83 million), an increase of 1.3 billion won.
Kwon Dae-jung, a professor of real estate economics at Hansung University, stated, "The primary reason for the rising prices of new apartment rights and occupancy rights is the supply shortage. When supply is sufficient, buyers can wait for new sales, but in a situation where new builds are scarce, demand for existing rights increases, driving prices up."
He added, "As the completion date approaches, the premium increases because the time for realizing the use value is nearing. Once a buyer secures a unit, their funds are tied up for several years, so the shorter that period, the higher the value of the rights becomes."
Industry experts predict that the shortage of new apartment supply in Seoul will continue for the foreseeable future, suggesting that the strength of the apartment rights and occupancy rights market may persist. However, uncertainties remain regarding interest rates, lending regulations, and the potential for increased supply, making it difficult to definitively predict the upward trend.
* This article has been translated by AI.
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