Kangnam Apartment Prices Show Polarization

Apartment prices in the Seoul Kangnam area have generally increased this year but show `polarization` between apartment complexes.

Yesterday, the Ministry of Construction & Transportation asked Kookmin Bank and the Korea Appraisal Board for the latest monthly fluctuation rate in apartment prices for the major 135 complexes in the Kangnam area. Results showed that prices increased in 48 complexes, with 40 complexes showing a less than 2 percent increase and 47 falling or remaining steady.

By apartment complex, Dogok-dong’s Tower Palace increased the most, rising 12.3 percent in just a month. Following were Godeok-dong’s Godeok Chugong 2 Complex (10.2 percent), Sangil-dong’s Godeok Chugong 3 Complex (7.5 percent) and Godeok-dong’s Shiyong Hyundai APT (7.1 percent).

A 16 pyong unit in the Banpo 3 Complex, which was 0.63-0.64 billion won until last month, rose by 50 million won and is now nearing 7 billion won. Kaepo Chugong apartments rose approximately 30 million won each by pyong units. Most apartment complexes showing increased prices are planning reconstructive work.

Average prices for the entire Kangnam area are close to reaching the level they were at before the October 29 measures. According to Real Estate 114 and other real estate information providers, compared with last year’s prices on October 24 (just before the October 29 measures), as of April 9 the average prices in the Kangnam area reached 99.2 percent for Kangnam-gu, 98.0 percent for Kangdong-gu, 100.2 percent for Seocho-gu and 99.5 percent of Songpa-gu of their original value. Realtors are cautiously projecting that “Kangnam invincibility” may be repeated.

Meanwhile, in the same Kangnam area, prices fell in some complexes.

Shinchon-dong Chamshil I-Space fell by 4.9 percent during the latest month. Shinsa-dong Kangnam Sangka APT (-3.9 percent), Dogok-dong Woosung Character-ville (-2.6 percent) and Sangil-dong Woosung Villa (-2.0 percent) also fell.

The real estate market and government see future prices differently.

Real estate firms project that, for the time being, the increase will continue, with high-class apartments still in demand and the Jamsil complexes going through reconstruction.

Construction & Transportation Ministry, on the other hand, believe that prices will fall and then even out. Kwon Do-yeob, Director of the Housing Department in the Construction & Transportation Ministry, said, “This current rise in price is temporary, and when the real estate transaction reporting system goes on full run, prices will stabilize.”

Kwang-Hyun Kim kkh@donga.com