Why the Current Rise in Seoul's Apartment Prices Feels Different

Seoul Apartment

Recently, Seoul's apartment market has experienced a simultaneous increase in both transaction volume and prices. This trend extends beyond traditional hotspots like Gangnam, Seocho, and Songpa, affecting areas such as Seongbuk and Seodaemun as well. However, the nature of this rise appears different from past surges. In this post, we'll explore the current state of Seoul's apartment market, how it differs from previous periods, and why these changes are happening.

1. Current State of Seoul's Apartment Market

According to the Seoul Real Estate Information Plaza, the average transaction price of apartments in Seoul exceeded 1.2 billion KRW for the first time last month. This figure is higher than the peak prices seen in late 2021 to early 2022. Additionally, the number of transactions has significantly increased, with 6,936 apartment sales recorded last month—the highest since December 2020.

2. Price Increases in Diverse Areas

While previous price hikes were concentrated in Gangnam, Seocho, Songpa, and the so-called "MayoSeong" (Mapo, Yongsan, Seongdong) districts, recent increases are being observed in other districts such as Seongbuk and Seodaemun. In Seodaemun, the average apartment price last month was 977.39 million KRW, up about 100 million KRW from the previous year. Seongbuk also saw a similar increase, with the average price rising to 829.94 million KRW.

3. Changes in Transaction Patterns

The proportion of rising transactions has also grown. Last month, 49.6% of apartment sales in Seoul were at higher prices than the previous transactions for the same unit—a significant increase from 38.6% in January. However, the proportion of transactions setting new record-high prices remains relatively low at 9.3%, compared to the periods of steep price hikes in the past.

4. Increase in End-User Transactions

Unlike previous surges driven by speculative investments, the current rise in apartment prices appears to be driven by end-users. According to the Ministry of Land, Infrastructure and Transport, the proportion of Seoul apartment buyers who reside outside of Seoul dropped to 20.5% in May, down from 23% in January. This suggests that more transactions are being made by people who intend to live in the purchased apartments, rather than by investors seeking capital gains.

The recent rise in Seoul's apartment market shows a distinct pattern compared to previous surges. While transaction volumes and prices are increasing, the current trend is primarily driven by end-users, with rising prices observed across various districts. These changes provide crucial insights into the future direction of the real estate market.

What are your thoughts on the recent changes in Seoul's apartment market? Feel free to share your opinions in the comments.