Apartment prices in Seoul rose 4.22% in 2016: report

Apartment prices in Seoul rose 4.22 percent last year, slowing slightly from the previous year, according to data from KB Kookmin Bank on Wednesday.

It was 1.34 percentage points lower than the 5.56 percent growth in 2015, which could signal that Seoul’s housing prices have started to go downhill. 

However, the annual growth was the second highest since 2007, the report showed.

Prices of apartments in Songpa-gu, the southeastern area of the city, showed the highest growth of 5.69 percent, followed by prices in Seocho-gu at 5.56 percent and Gnagnam-gu at 5.29 percent.

“Jeonse” prices, or two-year lease contracts in Korean real estate terms, for apartments in the city climbed 3.09 percent last year. It is a significant fall from the 9.57 percent increase seen in 2015.

“As the government has taken measures to tighten loan regulations amid growing concerns about rising US interest rates, potential buyers and sellers are waiting and watching the market situation,” said an official at KB Kookmin Bank.

In the Seoul metropolitan areas, mostly in Gyeonggi Province, apartment prices edged up 2.89 percent. The figure for the country’s five metropolitan cities -- Busan, Gwangju, Daegu, Daejeon, Ulsan --was 0.65 percent.

Among other cities, Jeju and Seoguipo City had the sharpest growth of 10.18 percent in home sale prices, higher than the 7.88 percent increase seen in 2015, the report noted.

Prices in Haeundae-gu of Busan rose 7.13 percent.

“The common forecast is that home prices will start going down from this year due to a mismatch between supply and demand,” said Han Young-jin, a researcher at Real Estate 114, a local property market information provider. “Downward pressure on home prices is expected to grow throughout the year, with a large number of apartments set to be constructed.”

By Song Su-hyun (song@heraldcorp.com)