Gangnam Apartment Prices Fall for Second Straight Week... Mid-to-Low Price Areas Continue to Rise

A clear polarization in housing prices is emerging due to changes in government tax policy. Over the past two weeks, expensive apartment prices in Seoul's Gangnam district have fallen, while prices in lower-priced areas with less tax burden are trending upward due to demand from people looking to actually live in the homes. Ultra-expensive apartments with a market price of over 4 billion won face an increased comprehensive real estate tax burden, whereas apartments with an official price of 1.4 billion won or a market price of 2 billion won or less are exempt from this tax. Consequently, more people are avoiding the costly Gangnam area and seeking affordable alternatives. Kim In-man, head of the Real Estate Economic Research Institute, analyzed, "The market price range under 2 billion won is the most beneficial, receiving both capital gains tax benefits and exemptions from the comprehensive real estate holding tax."

In reality, all units sold in one apartment complex in Seoul's Seodaemun-gu this month fetched record-high prices. The situation is different in Gangnam. The distressed sale price of an apartment that passed the 5.5 billion won mark three months ago has now dropped to around the 5 billion won level. Yang Seok-young, a broker operating in Seoul's Seocho-gu, explained, "It seems prices have adjusted by about 7% to 10%. There are people asking to sell their property first, and listings that weren't there before are increasing." Even with the increase in distressed sales, buyer sentiment remains lukewarm.

Statistics also confirm this trend. While apartment prices in Seoul rose by 0.22% overall this week, Seocho and Gangnam saw declines. In contrast, districts such as Seongbuk and Seodaemun rose at double the Seoul average.

The rapid rise in mid-to-low-priced apartment values is increasing the burden for actual residents looking to buy a home. This trend is also visible outside of Seoul. In Gyeonggi Province, non-regulated areas such as Gwonseon in Suwon and Byeongjeom in Hwaseong saw the steepest increases.