▲ Seoul Apartments
As the strong performance of lower- and mid-tier regions in the Seoul apartment market continues for an extended period, attention is focused on whether the upward trend will persist, given that some areas have yet to reach their previous peak prices.
According to the Korea Real Estate Board today (the 30th), as of the fourth week of August, the five autonomous districts in Seoul where apartment sales price indices remain below their previous all-time highs are Gangbuk-gu (102.7), Dobong-gu (102.1), Nowon-gu (103.0), Eunpyeong-gu (101.9), and Geumcheon-gu (102.3).
Prices in these regions surged significantly between 2021 and 2022, a period marked by the impact of the implementation of the two lease laws (the right to claim contract renewal and the cap on lease increases).
This was because a decrease in jeonse (lump-sum housing lease) listings and soaring jeonse prices drove tenants and homeless people to turn to purchasing homes, concentrating demand in relatively affordable mid-to-low-priced areas alongside active gap investing (purchasing homes with tenants' jeonse deposits in place).
Gangbuk-gu recorded its previous peak at 108.8 in late 2021, while Dobong-gu peaked at 114.1 between late 2021 and early 2022, and Nowon-gu reached its highest price level of 107.5 around the same period from late 2021 to early 2022.
Geumcheon-gu also recorded a previous peak of 107.7 during a similar timeframe, leaving prices about 5 percent higher than current levels, while Eunpyeong-gu approached its previous peak of 102.8 in late 2021.
After hitting their previous peaks at that time, the lower- and mid-tier markets showed a sluggish atmosphere compared to other regions, experiencing a period of weakness before visibly rebounding from the first half of this year amid tightening loan regulations, declining jeonse listings, and rising jeonse prices.
Jungnang-gu, a representative lower-tier region in Seoul, recently sustained a steep upward trend, with its sales price index for the fourth week of August reaching 103.3, surpassing its previous peak of 102.9 from early 2022.
Under last year's October 15 measures, mortgage loan limits for regulated areas in the Seoul metropolitan region were differentiated based on market value: up to 600 million won for homes priced at 1.5 billion won or less, 400 million won for homes exceeding 1.5 billion won up to 2.5 billion won, and 200 million won for homes exceeding 2.5 billion won. However, these regions feature a high volume of properties priced below 1 billion won, giving them a relatively high capacity for market entry utilizing loans.
With substantial pent-up demand, there is little backlog of unsold or uncontracted properties, and the transaction turnover rate—which indicates the degree of revitalization in the sales market—is also relatively high.
According to statistics on regional transaction turnover rates for July of this year from the Court Registry Information Center, Eunpyeong-gu recorded the highest rate in Seoul at 0.72, followed by Jungnang-gu at 0.65.
Gangbuk-gu (0.47), Dongdaemun-gu (0.45), and Nowon-gu (0.43) also registered high figures.
Observations suggest that the concentration of genuine demand in these regions is likely to continue through the second half of the year.
Considering the primary consumer base, the policy environment is also favorable.
Previously, through the August 13 Comprehensive Financial Measures for Stabilizing the Real Estate Market, the government eased the marriage penalty for married couples regarding loans and housing subscriptions. To achieve this, it expanded household loan aggregate management targets, introducing real estate-related financial measures advantageous to young, homeless prospective buyers.
For the newlyweds' Bogum자리 Loan (Bogeumjari Loan), a condition was added where loans are available if either partner meets the criteria—expanding the previous eligibility requirement of "combined annual income of 85 million won or less" to also include cases where "individual income is 70 million won or less"—thereby eliminating disadvantages married couples previously faced in housing finance loans. Furthermore, the growth rate target for total loan management was raised from 1.5 percent to 3.0 percent.
Although buyers' financing burdens are expected to increase as the Bank of Korea raised its base interest rate for the second consecutive time to 3.00 percent per annum, prevailing market observations suggest that this will have little impact on the lower- and mid-tier markets—which are driven primarily by genuine demand—because the rate hike is not sharp and existing loan rates are already at high levels.
(Photo: Yonhap News)
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