The real estate market in Seoul has entered a wait-and-see phase. There was a commotion as the Seoul City reversed its decision to lift the land transaction approval system, and political uncertainty has concluded with the Constitutional Court's ruling on the impeachment. With the presidential election system kicking in by June, and with the economic recession and unpredictable policy environment, real estate investors are monitoring the market.
According to a survey conducted by ChosunBiz of 10 real estate experts on the 7th, all 10 experts forecast that apartment prices in Seoul will continue to rise in the future. They noted there might be a temporary wait-and-see attitude, but they agreed that prices would rebound within the year. There was also consensus that the long-term trend of 'supply shortage' would continue to drive price increases.
◇"Seoul housing prices could rise by as much as 10% this year... 'Supply shortage' is a long-term factor for price increase
The Seoul apartment trading market currently shows a deep wait-and-see attitude. After the Seoul City lifted the so-called land transaction approval system in the Jamsil, Samsung, Daechi, and Cheongdam areas on February 13, transactions of apartments surged significantly in February and March. The trading volume, which had been around 3,000 cases from September last year to January this year, recorded 6,228 cases in February and 6,144 in March as of the 3rd. However, with the city re-designating the approval system after a month, transactions have now frozen.
Experts believe that this wait-and-see attitude will be temporary. Research results have already shown that designating the approval system has little effect on long-term price stability. Professor Lee Chang-moo from Hanyang University noted at a citizen forum held by Seoul City in December last year that "while there was a price stability effect in the early stages of regulation, its effectiveness diminished over time." With the Constitutional Court's ruling, political uncertainties are expected to resolve within the year, leading the market back to stability.
Professor Kim Jin-yu from Kyungnam University commented, "The ruling of the Constitutional Court was merely a question of whether the upward phase arrives slightly earlier or later," adding, "I expect the overall forecast for this year will be stable in the first half and upward in the second half." He further stated, "I believe apartment prices in Seoul will rise by about 5% to 10% this year."
Yoon Ji-hae, a senior researcher at Real Estate R114, stated, "Once demand groups develop resilience to the transaction approval system, the effects of price suppression may weaken, similar to regions with existing regulations such as Apgujeong, Yeouido, Mokdong, and Seongsu-dong."
"Supply shortage" has been identified as a long-term factor that could drive up apartment sale prices in Seoul. According to Real Estate R114, a total of 37,681 apartments are expected to be available for occupancy in Seoul this year. This is expected to dramatically decrease to 9,640 units in 2026 and 9,573 units in 2027, which is about 23% of the recent five-year average of 40,716 units.
Park Won-gap, a senior real estate specialist at KB Kookmin Bank, noted, "The strong rental prices for apartments will also affect the sales prices," adding that, "The housing supply rate in Seoul is at 93.6%, and the ownership rate is low at 44%, while investment by outsiders is on the rise."
Professor Lee Chang-moo stated, "It will take a considerable amount of time to resolve the long-term supply shortage," and continued, "The preference for 'one smart unit' is likely to persist unless the tax system regarding multiple homeowners is reformed."
◇In the short term, 'balloon effect'... Continuous inflow of actual demand in Gangnam and Yongsan
When examining the forecast for apartment sale prices in Seoul by region, there was overwhelming agreement that a 'balloon effect' would occur in areas outside of Gangnam 3 and Yongsan in the short term. On the 10th of last month, the Seoul City re-designated Gangnam 3 and the entire Yongsan district as land transaction approval areas. There are also opinions suggesting that buying sentiment may temporarily concentrate in nearby regions. According to Real Estate R114, as of January, the average prices of apartments in Yongsan, Seongdong, and Mapo were 2.1988 billion won, 1.506 billion won, and 1.39678 billion won, respectively.
Kim Hyo-sun, a senior committee member at NH Nonghyup Bank, stated, "Transaction activities remain possible in unregulated areas along the Han River, such as Seongdong, Mapo, Gangdong, and Gwangjin, which could show relative strength." She added, "The future housing market will likely demonstrate pronounced polarization by region, depending on the level of regulations, lending conditions, and the presence of development opportunities."
Professor Ko Jun-seok of Yonsei University noted, "Actual demand seekers who need to purchase a house may divert their focus to areas outside land transaction approval regions." He added, "The balloon effect might manifest as they relocate to areas like Dongjak, Mapo, Seongdong, and Gangdong, leading to price increases in those apartment markets as well."
Prospects for the Gangnam 3 and Yongsan regions, which are bound by the approval system, remain positive. Even if transaction volumes decrease somewhat, a limited number of transactions are likely to lead to record-high prices. The exclusive 183㎡ unit in the Shin Hyundai 11th building in Apgujeong-dong was traded at 9.2 billion won on the 19th of last month, setting a new record. The exclusive 196㎡ unit in the Hyundai 1st building in Apgujeong-dong also changed hands for 9.2 billion won the same month. The exclusive 190㎡ unit in Hanbo Mansion 2 in Daechi-dong was also sold for 5.85 billion won on the 21st of last month, and a 102㎡ unit in the Hangang Mansion in Ichon-dong, Yongsan, achieved a record price of 4.3894 billion won on the 23rd.
Park Hapsu, a lecturer at the real estate graduate school of Kunkuk University, noted that "Gangnam 3 and Yongsan are currently anticipating intensive development, which is increasing expectations regarding future value and the rarity due to supply shortages." He also mentioned, "Trends such as the desire to enter high-end communities and the inheritance of wealth among the affluent are likely to sustain the upward price trend."
Jo Young-kwang, a researcher at Daewoo E&C, stated, "Gangnam 3 and Yongsan are expected to maintain stable prices given their location," adding, "In particular, the reconstruction of Apgujeong in Gangnam and the development areas of Hannam and Jeongbi-Chang in Yongsan are expected to show strength."
However, prospects for the northeastern regions of Seoul, which have a large supply, appeared bleak. According to Real Estate R114, among this year's total of 14,734 apartments scheduled for occupancy in Seoul, 65% (9,603 units) are concentrated in the northeastern regions.
Woo Byeong-tak, a specialist at Shinhan Bank's Premier Pathfinder, stated, "In regions with a large number of new units, such as Dongdaemun, Imun, Huigyeong, and Jangwi New Town, we expect transactions to remain slightly stable." He added that, "Areas like Anyang, Gwacheon, and Suwon are likely to show slight stability, while other regions in Gyeonggi Province are expected to see a slight decline until the second half of the year."
Ham Young-jin, head of the real estate research lab at Woori Bank, stated, "This year, the preference for purchasing housing in Seoul is concentrated only in the Gangnam area and along the Han River," adding that, "Due to high sale price issues, the profitability of redevelopment projects in Nowon, Dobong, and Gangbuk has decreased, causing transactions to stall."