Average apartment price soars 40% under Moon administration

The average market price of Seoul apartments has soared 40 percent in the past 2 1/2 years, notwithstanding the incumbent Moon Jae-in administration’s series of price-curbing measures, data showed Tuesday.

According to a survey conducted by housing information provider Real Estate 114 on 241,621 apartments, the average sale price of Seoul apartments stood at 823.76 million won ($690,263) as of last week, up 40.8 percent from 585.24 million in the first half of 2017.

It was in May that year that President Moon took office in a snap election to fill in the vacuum due to his predecessor Park Geun-hye’s impeachment.

The average transaction price also climbed 238.52 million won during the given period.

Since then, the Moon administration has effectuated intensive measures to curb real estate prices -- on Aug. 2, 2017; Sept. 13, 2018; and price ceiling on new apartments this year.

Even after the major regulations, the pace of apartment prices has been rising rise steeply this year, marking an 18.3 percent rise from a year earlier, data showed.

By district, it was the affluent Gangnam-gu which has seen the steepest rise in apartment prices, up 53.3 percent from the first half of 2017. The average transaction price came to 1.82 billion won.

Excluding Gangnam-gu, however, it was the underdeveloped northern part of the city which saw a steep rise.

The average apartment price in downtown Jongno-gu rose to 834.92 million won, up 51.9 percent from 549.62 million won as of June 2017. Next were Gwangjin-gu, Yongsan-gu and Seodaemun-gu -- all marking an increase rate of more than 50 percent during the same period.

Songpa-gu, Seocho-gu and Gangdong-gu -- the other three districts in the so-called affluent Big Four or the Gangnam Belt -- remained relatively moderate in the pace of price change.

“The young generation tends to prefer newly built apartments (over conventionally prestigious ones in the Gangnam zone),” said Kim Eun-jin, head of research at Real Estate 114.

“Such a tendency has narrowed the gap between new residential complexes in Gangbuk and the old ones in Gangnam.”

Taking up the largest part of apartment buyers this year were those in their 30s, accounting for 31.2 percent of transactions as of October, according to the Land Ministry.

With most being first-time homebuyers, these consumers are relatively free from the government’s enhanced loan regulations -- which mostly target speculative buying and multiple home ownership.

Experts, however, also expressed concerns that this may pose a potential financial risk for the corresponding age group.

“Considering the comprehensive real estate tax effect in the year-end, the upcoming hike in possession tax, and the government’s supplementary measures, it is unlikely that Seoul’s apartment prices will continue to rise as steeply as before,” said Park Won-gap, senior real estate analyst at KB Kookmin Bank.

“I recommend (housing mortgage borrowers) to take a conservative approach at this point in time.”

By Bae Hyun-jung (tellme@heraldcorp.com)