Reconstruction Apartment Prices Rise 8.7 Percent

Housing prices in the Seoul metropolitan area have increased more rapidly than last year because of the rising price of apartments that have reconstruction plan, and the expectations from a development plan in Pangyo new town, Sungnam city, Gyeonggi province.

On April 8, Real Estate 114, a company that provides information on real estate, said that the rise of apartment prices in Seoul recorded 2.65 percent on average in the first quarter (January to March) of this year, up from 1.59 percent in the first quarter of last year.

The price of apartments that have reconstruction plan jumped by an average of 8.73 percent, showing more than double the percentage increase over the same period last year.

In particular, the prices of apartments with reconstruction plan in Songpa-gu (13.97 percent) and in Gangdong-gu (11.37 percent) rose by more than 10 percent.

The rapid rise in apartment prices reflects expectations that rebuilding plans would take off in earnest in low-density apartment building areas, such as in Jamsil-dong in Songpa-gu, and Amsa-dong and Myeongil-dong in Gangdong-gu.

In the first quarter, the price of the apartments in satellite cities increased by 3.3 percent, outstripping the rate in Seoul.

The rises in Ilsan (0.55 percent) in Goyang city, Pyeongchon (1.1 percent) in Anyang city, Sanbon (0.49 percent) in Gunpo city, and Jung-dong (0.12 percent) in Bucheon city were not rapid, but the housing price in Bundang, Sungnam city, climbed as much as 5.9 percent, leading the upward trend in new towns.

Analysts say the rise in housing prices in Bundang, located near Pangyo, was triggered by expectations that the reconstruction efforts in Pangyo will also boost development in neighboring cities.

imsoo@donga.com