Seoul apartment prices post steepest monthly gain in 5 years in June

Apartment and villa complexes in Seoul as seen from Seoul Sky, the observation deck of Lotte World Tower in Songpa-gu. [Yonhap]

Actual transaction prices for Seoul apartments rose 2.50 percent in June from the previous month, the steepest monthly gain in five years. In July, tighter lending regulations pushed the share of mid-to-low-priced apartments — those priced at 1.5 billion won ($1.07 million) or below — back above 80 percent of all transactions.

According to the Seoul Metropolitan Government, the Korea Real Estate Board's actual transaction price index for Seoul apartments stood at 203.5 in June, up 2.50 percent from May and 13.79 percent from the same month last year.

The 2.50 percent monthly gain surpassed the 2.44 percent recorded in June 2021, when home prices were rising sharply, making it the highest monthly increase in the past five years.

Actual transaction prices rose across all five zones of Seoul. The northeast zone posted the largest gain at 2.74 percent, followed by the northwest zone at 2.73 percent, the southeast zone at 2.52 percent and the southwest zone at 2.41 percent — all recording increases in the 2 percent range. The city center zone rose 0.57 percent. Compared with the same month last year, the southwest zone led with a 14.92 percent gain.

By unit size, mid-to-large apartments with an exclusive use area of more than 85 square meters and up to 135 square meters posted the biggest monthly gain at 3.05 percent. Small units rose 2.67 percent, mid-small units 2.53 percent and micro units 1.99 percent. Large units exceeding 135 square meters in exclusive use area fell 0.33 percent.

Jeonse prices also continued to climb. The actual transaction price index for Seoul apartment jeonse rose 1.28 percent in June from the previous month, marking the fourth consecutive month of gains in the 1 percent range. Prices have risen for 11 consecutive months since August last year. Compared with the same month last year, jeonse prices were up 11.28 percent.

By zone, the northeast posted the highest jeonse price gain at 1.56 percent, followed by the city center at 1.35 percent, the southwest at 1.34 percent, the northwest at 1.26 percent and the southeast at 0.98 percent. By unit size, mid-small apartments with an exclusive use area of more than 60 square meters and up to 85 square meters recorded the largest increase at 1.48 percent.

Trend in the actual transaction price index and rate of change over the past five years. [Provided by Seoul Metropolitan Government]

In July, overall sales transactions held in the 5,000-unit range while demand shifted back toward lower-priced homes. As of Tuesday, Seoul apartment sales in July totaled 5,234 transactions, down 0.6 percent from 5,265 in June. The July figures may rise further, however, as the reporting deadline for that month's contracts has not yet passed.

Particularly notable was the share of apartments priced at 1.5 billion won or below, which expanded to 81.2 percent of July transactions from 76.3 percent in June, a gain of 4.9 percentage points. The share of lower-priced deals had risen early in the year due to lending restrictions, then dipped in April and May as transactions in higher-priced homes picked up ahead of the expiration of a capital gains tax surcharge exemption. It has since rebounded as high-end transactions tapered off and end-user demand for mid-to-low-priced apartments recovered under tighter lending conditions.

By district, Nowon-gu recorded the highest transaction volume at 632 deals, followed by Jungnang-gu, Gangseo-gu, Guro-gu, Seongbuk-gu and Eunpyeong-gu. In all of these districts, apartments priced at 1.5 billion won or below accounted for more than 95 percent of total transactions.

In the July jeonse and monthly rent market, the share of jeonse and monthly rent transactions returned to roughly a 50-50 split. Jeonse transactions fell 0.2 percent from the previous month to 8,204 cases, while monthly rent transactions dropped 20.2 percent to 8,082 cases, bringing the jeonse share to 50.4 percent.

Among jeonse contracts, the share of renewals rose to 53.8 percent, up from 52.8 percent the previous month and 44.8 percent in the same month last year. By contrast, the share of renewals in which tenants exercised their right to demand contract renewal fell to 53.5 percent, down from 55.8 percent the previous month and 60.1 percent a year earlier.

quq@heraldcorp.com