The Return of 'Zero Commission' in Gangnam as Housing Prices Soar: A Market Shift

The apartment market in Seoul's Gangnam area is heating up once again, with property prices hitting new highs daily.

The apartment market in Seoul's Gangnam area is heating up once again, with property prices hitting new highs daily. This has led to a seller's market, where practices reminiscent of past housing booms, such as sellers asking buyers to cover real estate commissions, have reappeared. With the number of available listings dwindling and buyer sentiment growing stronger, let's delve into the factors behind these recent developments.

Apartment prices in Seoul’s Gangnam area have been surging, creating a seller’s market where sellers are now demanding that buyers cover real estate commission fees. Recently, a rapid sale in an apartment complex in Seocho District saw the seller asking the buyer to pay the real estate commission. The justification was that, since the property was sold below market value due to its urgency, the buyer should bear the additional cost.

This phenomenon typically occurs when housing prices soar, and buyers struggle to find available properties. In contrast, during market downturns, it’s not uncommon for sellers to cover the buyer's commission fees. In the recent case, the commission was effectively included in the total price of the listing.

The overall number of apartment listings in Seoul, including Gangnam, has been decreasing. According to real estate big data platform Asil, the number of Seoul apartment listings dropped by 5.9% over two months, from 84,218 on June 8th to 79,254 as of the latest data. As listings become scarcer, buyer sentiment is also being affected.

Data from KB Real Estate Data Hub indicates that the weekly Buyer-Seller Sentiment Index for the 11 districts in Gangnam reached 78.91 last month, marking the highest level in nearly three years. This index, which measures market sentiment, suggests that the demand from buyers is strong. While the index for the 11 districts hasn't yet crossed the threshold of 100, which would indicate a complete seller's market, it is believed that the index has already surpassed 100 in the core three Gangnam districts.

A representative from the Korean Association of Realtors commented on the situation, noting that while there is no legal requirement for one party to pay the commission, sellers may set it as a condition of the sale. If a buyer is determined to proceed with the purchase, they might have to shoulder the commission as well. However, if the buyer refuses to pay the commission, they can simply choose not to finalize the contract, and there are no grounds for filing a complaint with local authorities or the association.

Experts predict that this trend of scarce listings in these areas will continue for the foreseeable future. Professor Kwon Dae-jung from the Real Estate Department at Sogang University pointed out that this is a common occurrence when supply is low. In some cases, sellers may even ask buyers to cover part of the capital gains tax in addition to the commission. The consensus is that the seller’s market is likely to persist until the supply shortage is resolved.

As the Gangnam apartment market in Seoul heats up again, we are seeing the resurgence of a seller’s market. With a scarcity of listings, practices like sellers asking buyers to cover commission fees have reappeared, adding extra costs for buyers. This situation is expected to continue until the supply shortage is addressed, making it crucial for buyers to make informed decisions in this competitive market.

Moving forward, it's essential to keep an eye on market changes and adapt strategies accordingly.