Concentration Below 1.5 Billion Won and Turn to Villas for 'Survival Buying'

[Anchor]

It is time for Friendly Economy on Tuesday, and reporter Han Jiyeon is here with us. Han, we understand that average prices for apartments north of the Han River in Seoul have risen sharply.

[Reporter]

That appears to be largely driven by a concentration of demand for apartments priced at 1.5 billion won or less.

The average sales price for apartments in the northern area of Seoul has surpassed 1200 million won for the first time.

Mortgage loan limits drop sharply once a property exceeds 1.5 billion won.

For homes priced at 1.5 billion won or less, you can borrow up to 600 million won; for homes above that, the limit is 400 million won, and for those exceeding 2.5 billion won, it is 200 million won.

Assuming you borrow up to the maximum limit, a 1.5 billion won home and a 1.6 billion won home have a price difference of 100 million won, but require 300 million won more in out-of-pocket cash.

According to KB Real Estate statistics, apartments across the 14 districts north of the Han River rose by more than 8 million won over the span of a month, showing a higher growth rate than the Seoul average.

The average jeonse (lump-sum housing deposit) price also exceeded 600 million won for the first time.

However, the atmosphere across Seoul as a whole has shown some changes.

Housing prices in the three districts of Gangnam have been declining for several weeks.

Weekly statistics for Gangbuk also show the pace of increases gradually narrowing, and unsold apartments in Seoul have exceeded 78,000 units, marking the highest accumulation in seven months.

This indicates that while the number of sellers has increased, prospective buyers are adopting a wait-and-see stance due to loan barriers and interest payment burdens.

Last month, the average interest rate on newly issued mortgage loans across the five major commercial banks exceeded 4.9%.

At the same time, some analysts suggest it is still premature to conclude that housing prices will drop immediately just because listings are piling up.

Not many homeowners are lowering their asking prices yet.

[Anchor]

Even if the pace of growth has slowed, prices are already high, which has reportedly led more people to look for villas (multi-family and row houses).

[Reporter]

Villa transactions in Seoul surpassed 30,000 units through September of this year.

This is the first time in five years since 2021, when housing prices skyrocketed.

Multi-family and row houses are commonly referred to as villas.

Transactions increased by more than 4,600 units compared to the same period last year.

Prices have also risen, with the average sales price reaching 398 million won, the highest on record.

In some areas, villas have even experienced higher price increases than apartments.

Looking at the southeastern region, which includes the four Gangnam districts, through September of this year, apartment prices rose 3.2% while villa prices jumped 7.6%.

The northeastern region, which includes Gwangjin-gu, recorded a villa price increase of over 8%, ranking first among Seoul's regional districts.

Real estate agencies in Gwangjin-gu report that there are virtually no villa listings available, as properties sell the moment they appear on the market.

Why is there such a rush?

First, the term 'survival buying' is being mentioned.

Many people are likely feeling the pinch as even apartments in outskirt areas become expensive and the burden of jeonse and monthly rent grows.

Consequently, people are turning to villas just to secure a roof over their heads.

Another factor is the expectation that even old villas could be transformed into new apartments through redevelopment.

Old residential neighborhoods in Gwangjin-gu are preparing to apply for the Seoul Metropolitan Government's Rapid Integrated Planning, which accelerates redevelopment procedures.

With expectations that prices will surge further once districts are designated, owners are holding onto their properties rather than selling unless they are in urgent need of cash.

Seoul villas experienced massive booms during both the new town craze and the 2020-2021 housing price surge.

Predictions are now emerging that a third price surge phase is highly likely.

[Anchor]

Lastly, the wealth gap in real estate has also widened significantly.

[Reporter]

The value of homes owned by the top 20% in property wealth reaches 290 times that of the bottom 20%.

This is the widest gap since statistics began being compiled in 2017.

This statistic compares the top and bottom 20% after ranking households by total property value and dividing them into five equal tiers.

Based on last year's data, homes owned by the top 20% averaged 690 million won, a 7.7% increase over the year, while those of the bottom 20% averaged 2.39 million won, dropping 9.1% to the lowest level since data collection began.

The resulting disparity is 290-fold.

Some might wonder if people actually live in homes worth just 2.39 million won, but that is not the case.

This statistic only counts owner-occupied homes where the owner actually resides.

Those who do not own a home, or own one but live elsewhere as tenants, are recorded as zero.

Since less than 7 out of 100 households in the bottom 20% tier live in their own homes, the average turns out to be only 2.39 million won.

Conversely, more than 8 out of 10 households in the top 20% tier live in homes they own.

Given that the data only counts the single residence they live in even if they own multiple properties, the actual gap is expected to be even wider when factoring in rental or investment properties.

The gap was around 146-fold in 2017, but has nearly doubled over the span of 8 years.

The overall wealth gap, including all assets such as housing, also reached a record high of 68.6-fold.

On the other hand, the income gap actually narrowed to around 11-fold.

While the difference in earned income decreased, the gap in accumulated wealth widened further.

With real estate accounting for roughly 70% of household assets, experts point out that the housing price gap could further exacerbate the wealth disparity.

Reported by Han Jiyeon
※ Please note: This article was translated by AI and may contain errors.