Surge in Seoul Apartment Prices: Doubling in 6 Years – Causes and Future Outlook

The average sale price of apartments in Seoul has doubled in just six years

The average sale price of apartments in Seoul has doubled in just six years. Rising costs of raw materials and labor, coupled with shifts in the real estate market, have driven this sharp increase. In this blog, we will analyze the reasons behind the rapid rise in Seoul apartment prices and discuss what we can expect moving forward.

The recent surge in Seoul apartment prices has dramatically impacted the housing market. According to data from the Korea Housing & Urban Guarantee Corporation (HUG), the average sale price per 3.3㎡ (1 pyeong) of private apartments in Seoul reached 44,017,000 KRW in July, marking a 100.8% increase from 21,921,000 KRW in February 2018. This means the price has doubled in just 6 years and 5 months.

This upward trend is not limited to Seoul alone. The greater Seoul area saw an 81.8% increase, and the nationwide average rose by 80.0%, indicating that areas outside Seoul also experienced a 1.7 to 1.8 times increase. This rise can be attributed largely to the ongoing release of ultra-high-priced apartments, which have significantly inflated the average sales price.

HUG reports that the inclusion of ultra-luxury apartment projects like "Forza Han River," which was launched earlier this year, has contributed to the rise in average prices. With more developments expected in the Gangnam area, this trend of rising prices is likely to continue in the near future.

Additionally, the ongoing increase in the costs of raw materials and labor continues to push prices higher. Senior Researcher Park Kwang-bae of the Korea Construction Policy Institute noted that while the rapid rise in construction material costs has somewhat stabilized, factors affecting overall construction costs, including labor, are still on the rise. These factors are expected to play a significant role in future price increases.

A representative from a major construction company confirmed that the pressure from rising raw material costs remains strong, and construction costs continue to increase. Given these circumstances, Seoul apartment prices are expected to remain high for the foreseeable future.

The sharp rise in Seoul apartment prices is the result of various economic factors converging. The ongoing increases in raw materials and labor costs, along with the continuous release of ultra-high-priced apartments, have fueled this trend. As these factors persist, it's likely that Seoul apartment prices will remain at high levels, making it crucial to closely monitor the housing market.