Prices of Large Apartments Up 2.8 Percent, Small Apartments Down 4.4 Percent

A year after the announcement of the government’s measures for stabilizing the housing market, referred to as the 10/29 measures, the prices of small-sized apartment residences measuring less than 20 pyong have fallen, while the prices of large-sized apartment residences measuring more than 40 pyong have risen.

Also, it is being reported that the housing market has been almost paralyzed due to the sharp drop in transactions stimulated by the expansion of excessive speculation areas and the introduction of the house transaction reporting system.

These are the outcomes from a survey conducted by Dong-A Ilbo, the Korea Housing Institute, and Real Estate 114, targeting 4,988,184 households in 12,563 apartment complexes. The aim of this survey was to analyze variations in housing prices and transactions a year after the implementation of the government’s housing measures.

Over the year, the average price of apartments throughout the nation has risen by a mere 0.03 percent. However, while the price of small-sized apartments measuring less than 20 pyong has fallen by 4.46 percent, large-sized apartments measuring more than 40 pyong have risen in price by 2.8 percent. This provides evidence that the government’s initial purpose behind these measures, to distribute wealth more equally, has not been met.

For example, the price of a 17-pyong Jugong apartment residence located in Haan-dong, Gwangmyeong, Gyeonggi Province, has fallen to 85 million won from 120 million won that was recorded in October 2003. In contrast, the price of a 50-pyong Tower Palace, Dogok-dong, Gangnam-gu, Seoul residence has risen to 1.35 billion won from one billion won over the same period.

However, the price of apartments in the Gangnam area under reconstruction, which have been a major target of government measures, has dropped by anywhere from four percent to seven percent.

Jang Seong-su, a research director at the Korea Housing Institute, explained this situation, saying, “Despite continuous levies targeting large-sized apartments, owners of these residences are enduring the current situation until the price recovers, and common people who have only one small-sized apartment end up having to sell their residences despite low prices when moving to other places.”

Kwang-Hyun Kim Eun-Woo Lee kkh@donga.com libra@donga.com