The gap between the average purchase price and rent for small apartments in Seoul has approached 600 million won. While rent prices have increased, the rise in purchase prices has been more rapid, widening the gap by 43.57 million won over the past six months. Even in northern Seoul, where prices were relatively lower, the gap has increased, adding to the financial burden for prospective buyers looking to transition from renting to owning.
According to an analysis by Aju Economy of monthly average purchase and rent price statistics from KB Real Estate Data Hub, the average purchase price for small apartments under 60㎡ in Seoul in October was 1.09 billion won, while the average rent was 492 million won. The difference between the two prices is 598.96 million won, up from 555.39 million won in April.
The price index also showed that the increase in purchase prices outpaced that of rents. In October, the purchase price index for small apartments in Seoul rose by 8.18% compared to April, while the rent price index increased by 6.98%, resulting in a 1.2 percentage point difference. Among the five size categories in Seoul, only small apartments saw a greater increase in the purchase price index than in the rent price index.
A representative from KB Real Estate stated, "Due to regulations limiting loans for properties under 1.5 billion won to 600 million won, demand for small apartments has concentrated, impacting the rise in purchase prices. This trend seems to be more pronounced in areas like northern Seoul, where the loan burden is relatively lower."
The average price gap for small apartments in the 14 districts north of the Han River also widened from 441.21 million won in April to 482.06 million won in October, an increase of 40.85 million won over six months.
Small apartments are often considered by buyers looking to enter the housing market due to their lower purchase prices. However, as the gap between purchase and rent prices increases, tenants face greater financial pressure when trying to use their rental deposits as funds for purchasing a home.
Actual transactions have confirmed that the increase in purchase prices has been greater than that of rents. According to the Ministry of Land, Infrastructure and Transport's real transaction disclosure system, a 59.98㎡ apartment in Mia-dong, Gangbuk-gu, was sold for 670 million won on April 7 and for 820 million won on September 22.
In contrast, the rent for the same size apartment was contracted for 450 million won in April and between 470 million and 500 million won in September. The transaction examples indicate that the increase in purchase prices has outpaced that of rents.
A real estate agent near Sosaem Station noted, "With house prices in northern Seoul on the rise and steady demand from newlywed couples, purchase prices have increased significantly. Those considering transitioning from renting to buying are either downsizing or relocating to areas like Jeongneung-dong or Songcheon-dong, where prices are relatively lower and not near subway stations."
Ham Young-jin, head of the real estate research lab at Woori Bank, assessed, "The burden of transitioning from renting to owning has increased across Seoul, including in northern areas where prices were previously more manageable." He added, "There is a growing preference for high-quality properties, and demand for housing among those in their 30s is increasing in these areas. The gap between rent and purchase prices, driven by the popularity of smaller apartments with relatively lower loan burdens, is expected to widen further in the near future."
* This article has been translated by AI.
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