Rising Property Prices in Seoul and the Capital Region: The Plight of Provincial Homeowners

Apartment prices in Seoul

Recent surges in apartment prices in Seoul and the surrounding capital region have led to a nationwide increase in apartment prices for the first time in nine months. However, while apartment prices in provincial metropolitan cities and other regions continue to decline, the rise in Seoul and the capital region has overshadowed these decreases. This situation leaves homeowners in these provinces feeling unfairly treated. This article delves into the reasons behind the property price hike in Seoul and the capital region and examines the challenges faced by homeowners in provincial areas.

Property prices in Seoul and the capital region have been steadily climbing. According to KB Real Estate's weekly apartment market trends, as of the 15th, nationwide apartment sales prices rose by 0.2% compared to the previous week. This marks the first increase in ten months since September of last year. Notably, apartment sales prices in Seoul rose by 0.17% compared to the previous week, the highest increase since November 2021.

This year, the property prices in key areas of Seoul, such as the three districts of Gangnam (Gangnam, Seocho, and Songpa) and the regions of Mapo, Yongsan, and Seongdong (referred to as Mayongseong), have consistently risen. Recently, other areas in Seoul have also seen price increases. The districts with the highest increases in apartment sales prices were Seongdong-gu (0.48%), Songpa-gu (0.42%), Seongbuk-gu (0.38%), and Seodaemun-gu (0.33%). This indicates that areas outside the three districts of Gangnam and Mayongseong are also experiencing a rise in apartment prices.

For example, the 84㎡ (17th floor) unit in the 'Nokbeon Station e-Pyunhansesang Castle' complex in Eunpyeong-gu was traded at 1.25 billion KRW last month, setting a new record. This represents an increase of 80 million KRW in just one month from the previous transaction in May, which was at 1.17 billion KRW.

In the capital region, apartment sales prices also rose by 0.07% compared to the previous week, the highest increase since December 2021. Areas with close proximity to Seoul, such as Gwacheon (0.78%), Sujeong-gu in Seongnam (0.36%), Hanam (0.31%), and Bundang-gu in Seongnam (0.2%), saw significant price hikes. For instance, a 117㎡ (17th floor) unit in 'Pangyo Prugio Grandble' in Bundang-gu was traded at 3.27 billion KRW last month, setting a new record.

On the other hand, apartment prices in provincial metropolitan cities (excluding Incheon) and other regions continued to decline, with a decrease of 0.04% and 0.01%, respectively. Despite these declines, the rise in apartment prices in Seoul and the capital region offset these losses, resulting in an overall increase in nationwide apartment prices.

Experts predict that the upward trend in apartment prices in Seoul and the capital region will continue for some time. Rising jeonse (long-term rental deposit) prices are also likely to push sales prices higher. The jeonse prices for apartments in Seoul have been increasing for over a year, with a recent 0.21% rise marking the highest increase in nine months. The jeonse price increase rate for apartments in the capital region was also 0.12%, the highest in eight months.

While the rise in apartment prices in Seoul and the capital region has turned the nationwide apartment price trend upward, homeowners in provincial areas continue to face challenging circumstances. This situation leaves provincial homeowners feeling unfairly treated. Continuous monitoring and appropriate policy responses are needed to address these disparities. Efforts from the government and related organizations are required to achieve a balanced real estate market between Seoul, the capital region, and provincial areas.