Apartment prices in Seoul's Gangnam area, which includes Gangnam, Seocho, and Songpa districts, are on a downward trend, yet some small apartments are still achieving record sales. In the rental market, the proportion of monthly rent transactions has surpassed half for the first time, while the outlook for housing projects in the metropolitan area has improved. However, actual housing construction and new contracts have decreased, indicating a gap between market recovery expectations and supply realities.
According to the Ministry of Land, Infrastructure and Transport's real transaction disclosure system, a 51-square-meter apartment in the Samik Daechung Apartment in Gaepo-dong, Gangnam, was 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 for the same size in 2022. Another 51-square-meter unit in the Gangnam Jagok Hillstate in Jagok-dong sold for 1.385 billion won on October 15, also marking a new high.
Despite the overall decline in apartment prices in Gangnam, some small units are still being sold at high prices. Analysts suggest that concerns over tax burdens on high-priced homes and lending restrictions are prompting buyers to opt for smaller properties while still wanting to enjoy the amenities of the Gangnam area.
The average transaction price for small and micro-sized apartments has also risen. Data from the Ministry of Land, Infrastructure and Transport shows that the average transaction price for micro-sized apartments (40 square meters or less) in the Gangnam area increased by 36.1%, from 661 million won in August to 899.5 million won in September.
Monthly Rent Transactions in Seoul Surpass 50% for the First Time, Average Rent at 1.66 Million Won
The trend of monthly rent transactions surpassing jeonse (long-term lease) is becoming more pronounced in Seoul's rental market.
According to data from the Seoul Real Estate Information Plaza, from January to September this year, monthly rent transactions accounted for 51.0% of the total rental transactions (177,027 cases), with 87,740 monthly rent transactions compared to 84,287 jeonse transactions, which is 3,453 fewer.
In the same period last year, monthly rent transactions totaled 93,010, while jeonse transactions were 116,272, giving monthly rent a share of 43.7%. This marks a 7.3 percentage point increase in the share of monthly rent over the past year. The significant decrease in jeonse transactions has expanded the proportion of monthly rent in overall rental transactions.
If the current trend continues, the annual share of monthly rent transactions could exceed 50% for the first time this year. Since the statistics began being compiled in 2011, the annual share of monthly rent has never surpassed half. Last year, it reached a record high of 44.5%.
Housing Market Outlook in the Metropolitan Area Turns Optimistic After Three Months, Outlook Index at 100.2
Monthly rent prices are also on the rise. According to the Korea Real Estate Agency's nationwide housing price trend survey, the average monthly rent for apartments in Seoul was 1.661 million won in September, up 218,000 won from 1.443 million won in the same month last year. The median monthly rent also increased from 1.2 million won to 1.4 million won during the same period.
Housing developers' outlook has improved. The continued rise in housing prices in the outskirts of Seoul and Gyeonggi Province has led to expectations of better business conditions.
On October 20, a survey conducted by the Korea Housing Industry Institute among housing developers revealed that the national housing business outlook index for October rose by 6.5 points to 86.4 from the previous month’s 79.9.
The housing business outlook index quantifies the sentiment of housing developers regarding market conditions. A score below the baseline of 100 indicates that more developers expect the market to worsen than improve.
Notably, the outlook index for the metropolitan area rose by 11.0 points to 100.2, surpassing the baseline for the first time in three months. The metropolitan index had fallen below the baseline for two consecutive months, recording 101.6 in July, then dropping to 86.1 in August and 89.2 in September.
Improved Outlook Contrasts with Declining Housing Construction and New Contracts
However, actual housing construction and new contracts have shown a downward trend, presenting a contrasting picture to the improved outlook.
According to the Korea Construction Industry Institute on October 19, total construction output in August increased by 7.4% compared to the same month last year, but residential construction output decreased by 2.7%. Construction output refers to the actual performance of ongoing projects. Despite an increase in overall construction output, the housing sector continues to decline.
New contracts, which indicate future construction volume, have also been sluggish. In August, public housing contracts fell by 26.8% year-on-year, while private housing contracts decreased by 1.5%. This contrasts with a 5.9% increase in overall public contracts.
While housing developers are optimistic about market recovery, both ongoing housing projects and new contracts are declining. With rising construction costs and the government lowering its projections for housing starts in the metropolitan area this year, concerns are growing that the sluggish housing construction could hinder future supply expansion.
* This article has been translated by AI.
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