Apartment Prices in Seoul Still Falling

A Kim who owns a 35-pyeong apartment in the New Hyundai Apartment complex in Apgujeong-dong, Gangnam-gu, Seoul, put his apartment up for sale for 1.5 billion won early this year. Kim fell under the category of "2 houses per household" and property taxes such as the Comprehensive Property Tax were heavy burdens to bear.

But the apartment did not sell. Kim lowered the offering price to 1.42 billion won last month and to 1.35 billion won again recently.

Mr. Kim In-hyeok, who is running a real-state agency nearby named the Shinsegye Agency, says, “The offering price of a 35-pyeong New Hyundai Apartment fell by 70 million to 80 million over the last two months but nobody asked about purchasing it. Many predict that the price will continue to fall."

The standard date for the taxation of Comprehensive Property Tax, June 1, is about a month ahead, and the trend of falling prices is expanding to cover expensive apartments following apartments to be reconstructed.

According to RealEstate 114, a real estate information company, the prices of apartments in Seoul this week (April 20-26) as of April 27 fell by 0.12%, the biggest fall recorded this year.

The prices of apartments in Gangnam in particular, where expensive apartments are concentrated, fell by greater degrees. In order, Gangdong fell (―0.76%), Yangcheon fell (―0.30%), Songpa fell (―0.28%), Gangnam fell (―0.18%), Gwanak fell (―0.17%), and Seocho fell (―0.11%).

According to a survey by Kookmin Bank, apartment prices in Seoul (―0.06%), in metropolitan area including Seoul (―0.05%), and in the whole country (―0.03%) fell simultaneously between April 17-23. This happened for the first time in two years since January 10, 2005.

Apartment prices in Gangnam, Seocho and Songpa have been dropping for 12 successive weeks, and the prices of apartments for reconstruction in the same regions have been dropping for 14 successive weeks.

According to a real estate agency, apartments of all sizes in Tower Palace, Dogok-dong, Gangnam-gu, fell by 50 million won over the last week, and the offering prices of 30-40 pyeong apartments in the Olympic Family Town complex, Munjeong-dong, Songpa-gu, also fell by 25 million won, lowering the price of a 32-pyeong apartment to 830 million won.

Research by Speed Bank, real estate information provider, revealed that the prices of apartments famous for high prices in Seoul and the metropolitan area, such as Eunma Apartments in Daechi-dong, Gangnam, Jugong Apartments in Dunchon-dong, Gangdong, Miseong, Jinju Apartments in Shincheon-dong, Songpa, and Jugong Apartments in Gwacheon fell below one billion won one after another.

Seo Jong-dae, the director of the Residence and Livelihood Division of the Ministry of Construction and Transportation, said, “The amendment bill of the Housing Law, the core of which is the ceiling for the sale price for houses, passed the National Assembly and compounded the effect of the regulation on house mortgages. As a result, the prices of houses are being stabilized at a lower level."

But Kim Tae-hwan, a realtor in Daechi-dong, says, “Out of the entire Eunma Apartment complex, only 3-4 apartments are for urgent sale at the moment. It would be misleading to tell the general situation of the market from this."

bae2150@donga.com jefflee@donga.com