July average sale price in Songpa-gu reaches 2.25 billion won, an all-time high since records began in 2005

Buying activity surges in mid-to-lower-priced complexes under 1 billion and around 1.5 billion won

New record transactions reported in Geoyeo, Munjeong and Jangji-dong

Apartment complexes in Seoul's Songpa-gu and the Hanam area of Gyeonggi Province, as seen from the Seoul Sky observation deck atop Lotte World Tower. [Herald DB]
Apartment complexes in Seoul's Songpa-gu and the Hanam area of Gyeonggi Province, as seen from the Seoul Sky observation deck atop Lotte World Tower. [Herald DB]

The average apartment sale price in Seoul's Songpa-gu surpassed the 2.2 billion won mark last month for the first time on record, reaching its highest level since the city began tracking the data in 2005. The average climbed more than 400 million won ($290,000) in just one year, driven by concentrated buying in mid-to-lower-priced complexes priced at or below 1 billion won and around 1.5 billion won. Although apartment transactions in Songpa-gu have slowed since the government announced its Aug. 3 tax reform package targeting high-value homes and non-owner-occupied properties, the average price has held above the 2.2 billion won threshold.

According to the Seoul Metropolitan Government's Real Estate Information Plaza, the average price of apartments sold in Songpa-gu last month came to 2.25 billion won — the highest since the city began compiling the statistics in December 2005. After hovering in the 1.8 billion to 1.9 billion won range earlier this year, the average crossed the 2 billion won line in April, when it reached 2.08 billion won, and has continued to climb since.

Compared with 1.82 billion won in the same month last year, the average rose 435.34 million won, or about 24 percent, in a single year. Against the July 2016 average of 726.27 million won, prices have tripled over a decade.

Analysts attribute the surge not only to large, highly sought-after complexes in Jamsil and Sincheon-dong, but also to a wave of buying in lower-barrier neighborhoods such as Geoyeo, Macheon, Munjeong and Jangji-dong, where mid-to-lower-priced complexes are concentrated. As high-end complexes centered on Jamsil pushed prices higher, units previously priced below 1 billion won have been pulled toward the 1 billion won mark, while those around 1.5 billion won have been gravitating toward 2 billion won — a "price alignment" effect that has lifted the district-wide average.

"After the leading complexes rise sharply and then stabilize, a rotation effect emerges in which complexes that had been held back in price begin to climb — and that is what we are seeing in Songpa-gu," said Nam Hyeok-woo, a real estate researcher at Woori Bank. "Complexes in the 1.3 billion to 1.4 billion won range are moving up to 1.5 billion won, and those in the 1.5 billion to 1.7 billion won range are trending toward 2 billion won."

A string of new record transactions in Songpa-gu's mid-to-lower-priced neighborhoods was reported last month. According to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system, a 131-square-meter unit at Samseong Plaza in Garak-dong changed hands on July 4 for 1.05 billion won, crossing the 1 billion won threshold for the first time. A 59-square-meter unit at Hillstate e-Pyeonhansesang Munjeong in Munjeong-dong set a new record on July 18 at 1.89 billion won, nearly 400 million won above its actual transaction price in the same month last year of 1.5 billion won.

An 84-square-meter unit at Hyundai 3-cha in Geoyeo-dong also set a new high, selling on July 20 for 1.39 billion won. The same unit type sold for 1.2 billion won in January, and within six months it is aligning toward the 1.5 billion won level.

The government's Aug. 3 tax reform package — which simultaneously raised holding taxes and capital gains tax burdens on high-value homes — has begun to cool the broader price rally in Songpa-gu. The district's apartment price growth rate this week stood at 0.09 percent, according to Korea Real Estate Board data, down from 0.20 percent in the last week of July. Tax-motivated listings have emerged at high-end complexes priced above 3 billion won, including the Jamsil Elite trio — Elz, Ricenz and Trizium — and Jamsil Jugong 5-danji, pushing asking prices slightly lower and prompting a wait-and-see mood among buyers.

Buying demand outside Jamsil has remained firm, however, and the district-wide average for this month has edged up further. The August average stood at 2.3 billion won, just below the 2.3 billion won threshold. As the deadline for reporting August transactions extends through the end of September, the final tally may still shift.

Experts expect the Aug. 3 tax reform, rising interest rates and tightened lending rules to constrain further gains at the high end, but see the rotation into relatively affordable mid-to-lower-priced complexes continuing for now. Analysts also note that high-income owner-occupiers who secure financing through Samsung Electronics' in-house housing loan program — set to take effect Tuesday — could provide a sustained stream of new buyers into Songpa-gu.

"Even in Dongtan, the Samsung Electronics in-house loan news is already triggering price-alignment moves centered on mid-to-lower-priced complexes," Nam said. "If the strong momentum in Dongtan and other southern Gyeonggi Province areas persists for now, we could see a chain of move-up purchases, with sellers there buying into Bundang and Songpa-gu."

He added that "even without that chain effect, Samsung Electronics in-house loan demand could flow directly into Songpa-gu rather than Dongtan, acting as a new source of demand — so the situation remains to be seen."


hwshin@heraldcorp.com