Prices of Sought-After Apartments in Seoul Start to Drop

The prices of even the most sought-after apartments in Seoul have started to drop amid a general lull in the real-estate market.

The price tag of some apartments in the Songpa, Seongdong and Dongjak districts have declined by hundreds of millions of won, apparently affected by a steep rise in interest rates, tough loan restrictions and prevailing sentiment that residential property prices are on the way down.

Also, many more apartments have been put up for sale due to the government's temporary waiver of transfer taxes for multiple-home owners as a way to increase available housing.

The tax break, which the previous administration was reluctant to implement despite criticism for its failure to increase housing supply, ended up helping stabilize prices, according to experts. But they add that the government must ease more regulations in order to increase housing supply.

According to the Ministry of Land, Infrastructure and Transport on Thursday, an 84 sq.m Ricenz apartment in Songpa sold on May 18 for W2.25 billion, down W400 million from a month ago (US$1=W1,255). An apartment in Acro River Heim, the most expensive residential property in Dongjak, sold for W2.1 billion, also down more than W400 million since February.

The Korea Real Estate Board said apartment prices in Seoul edged down 0.01 percent this week compared to the previous week. They showed signs of rebounding just after the presidential election in March but have declined again since late May. In Mapo and Seongdong they edged down 0.01 to 0.02 percent this week, and in upscale Gangnam they have been flat for the first time in 12 weeks.

According to price tracker Asil, there were 62,818 apartments up for sale in Seoul as of Thursday, up 25 percent compared to the time of the presidential election. This is the first time since August 2020 that their number surpassed 60,000.

Market analyst Koh Jong-hwan said, "Some people are skeptical of the effectiveness of the tax break for multiple-home owners, but for now it appears to be helping bring prices down. If supply increases to a point where sellers outnumber buyers, sellers start competing with each other, so prices decline."

One realtor in Seongdong said, "Some multiple-home owners who want to dispose of their apartments quickly have lowered their selling price, and buyers continue to take a wait-and-see attitude because there are forecasts that interest rates on housing loans could rise to six or seven percent."