Seoul fringe apartment breaks 2 billion won barrier as 'survival buying' grips outer districts

Raemian Gileum Centerpiece's standard unit sells for 2 billion won

Record-high transactions continue across Gileum New Town in June

A view of apartment complexes in Seoul. [Newsis]

It was a listing that had come on the market about a year ago for 1.8 billion won ($1.23 million). The owner gradually raised the asking price to 1.9 billion won, then 2 billion won, and this time I heard he was satisfied and sold it at 2 billion won.

성북구 A공인중개업소 관계자

An 84-square-meter unit — the so-called standard national floor plan — at Raemian Gileum Centerpiece in Gileum-dong, Seongbuk-gu has sold for 2 billion won, it has been confirmed. Even as mortgage rates have risen, record-high transactions have continued in Seoul's outer districts, and the complex has sharply lifted its market value as a result.

Real estate agents handling transactions at the complex said they were surprised that a 2-billion-won deal for the standard unit came sooner than the industry had expected. They added that a 59-square-meter unit had also changed hands at a record high of 1.55 billion won and that the actual transaction price would soon be officially registered.

The 84-square-meter unit at Raemian Gileum Centerpiece, the flagship new apartment in Gileum-dong, changed hands in January for 1.73 billion won (33rd floor), surpassing its previous peak of 1.65 billion won set in September 2021 (13th floor), and prices have continued to climb through the first half of this year. A 59-square-meter unit also traded above 1.5 billion won in June — nearly 400 million won higher than the market price of just over 1.1 billion won a year earlier.

Nam Hyeok-woo, a real estate researcher at Woori Bank, said the sold unit appeared to be a premium listing, noting that asking prices for new standard-sized units in Imun-dong, Dongdaemun-gu, have reached 2 billion won while pre-sale prices for new units in Jangwi-dong stand at 1.7 billion won. "It looks like prices rose under upward pressure, with Jangwi-dong pushing from below and Imun-dong pulling from above," he said.

Seongbuk-gu has recorded the highest apartment sale price index gain among Seoul's 25 autonomous districts this year, at 7.89 percent according to the Korea Real Estate Board, with Gileum New Town leading the surge. According to real estate data platform Asil, the 84-square-meter unit at Complex 8 Raemian set a record high last month, trading at 1.52 billion won (11th floor). Record-high deals were also struck across a range of unit sizes and complexes — including Complex 1 Raemian (84 square meters, 1.33 billion won, 17th floor), Complex 4 e-Convenience World (59 square meters, 1.18 billion won, 10th floor) and Gileum Dooboo Centreville (60 square meters, 1.09 billion won, 12th floor).

Market observers say the string of record highs reflects an unavoidable choice by end-users caught between rising sale prices and rising jeonse prices alike.

A real estate agent working in Seoul's outer districts said jeonse listings have become so scarce that end-users being pushed to neighboring areas and further out has become routine, adding that buyers searching for older apartments for what the industry calls "survival buying" — purchasing out of necessity rather than choice are budgeting an extra 100 million won on top of the purchase price to cover renovation costs.

Record-high transactions have also continued in Nowon-gu and Jungnang-gu. Along with Seongbuk-gu, both districts rank among the top three of Seoul's 25 autonomous districts for the steepest declines in jeonse listings. With jeonse options drying up, buyers who have stretched their finances to the limit are turning to purchases and driving up prices.

According to Asil, jeonse listings in these districts as of Tuesday had fallen sharply compared with a year earlier: Jungnang-gu dropped 83 percent (from 429 to 73 listings), Nowon-gu fell 72.2 percent (from 1,034 to 288) and Seongbuk-gu declined 71.3 percent (from 703 to 202). In Jungnang-gu, available jeonse listings have fallen below 100.

At Hanwha Granville, a large complex of 3,000 units in Wolgye-dong, Nowon-gu, the 84-square-meter (1.17 billion won, 9th floor), 75-square-meter (1.07 billion won, 20th floor) and 59-square-meter (1.06 billion won, 13th floor) units all set record highs last month. Just across the street in Seokgwan-dong, Seongbuk-gu, a 59-square-meter unit at Doosan Apartment is said to have traded at a record high of 1 billion won, pending official registration. In Jungnang-gu, an 84-square-meter unit at Myeongmok Raon Private (1.29 billion won, 14th floor) and a 95-square-meter unit (1.36 billion won, 20th floor) also changed hands at all-time highs.

A real estate expert said the gains were the result of mid- to low-priced apartments below 1.5 billion won lifting the broader market, compounded by rising pre-sale prices that have prompted a revaluation of existing units. "However, in a correction, mid- to low-priced apartments also vary widely by complex in terms of how far and how long prices fall, so buyers need to keep that in mind," the expert said.

hope@heraldcorp.com