Gangnam Housing Prices Still Rising

Apartment prices in southern Seoul and new cities in the Seoul Metropolitan area are still rising, according to bank and real estate agency reports yesterday.

Deposit amounts, which had been relatively stable, have risen as well. In some areas, deposit requirements have surpassed the highest levels in last year’s first half, putting a damper on the government’s August 31 real estate measures.

Rising prices have led to a drop off in sales, which has resulted in a shortage of rental houses and a corresponding increase in lease deposit requirements.

Kookmin Bank and Real Estate 114, a real estate agency, say that the average market price of apartments in Gangnam-gu, Seoul has increased by 7.77 percent since the beginning of the year.

The market price of Gaepo-Wooseong apartments about 31 pyeong in area in Daechi-dong, which sold for 1.2 billion won last June, are now selling for about 1.4 billion won. Asia Village Apartments, 57-pyeong units in Jamsil, Songpa-gu, are being sold for 1.9 billion won these days, which is higher than the 325 million won they were selling for before the release of last year’s August 31 real estate policy. This is a rise of 89.3 million won over the last two weeks.

The reconstruction market which receded a bit last month due to the government regulation, is also recovering.

Eunma Apartments in Daechi-dong, Gangnam are traded at 1.085 billion won, which is 35.8 million won higher than two weeks ago.

The rise of apartment prices in Yangcheon-gu, which has barely escaped the government’s regulation drive, has outpaced the Gangnam area’s.

Apartment prices in Mok-dong have risen 13.3 percent on average this year alone, and the market price of 35-pyeong units in the area has gone up to 1.05 billion won, an increase of 63.2 million won in the past two weeks.

While the presale of apartments in Pangyo New City, Gyeonggi Province is near at hand, neighboring Bundang new city and Yongin city are seeing rises as well.

According to Kookmin Bank, the average deposit on the lease of an apartment in Seoul stands at 5.17 million won per pyeong, an increase of 7.27 percent from 4.8 million won before the government’s August 31 real estate policies. This figure is 3.7 times higher than the deposit money raise of 1.9 percent in the first half of last year.

The Gangnam area and Yangcheon-gu have seen much higher increases. The rental deposit for the Olympic Athletes’ Village Apartments with 33 pyeong in Bangi-dong, Songpa-gu has recently increased from 225 million won in last September up to 275 million won, and the deposit money for 45-pyeong apartments in Mok-dong, Yangcheon-gu has also increased from 362.5 million won to 395 million won.

Meanwhile, the rental deposit for apartments in Yongin city, where people have started moving into new apartment complexes, such as the Dongbaek district, haven’t increased as much.

Real estate experts believe that the rise in deposits results from the fact that this is a moving season when there is a lot of demand for the lease of a house on a deposit basis and the demand has increased rather than for buying due to the continuously rising apartment prices.

Kim Gyu-jeong, a deputy manager of Real Estate 114, predicted that house prices only in Metropolitan areas where new apartment complexes will be on the market, are expected to be stable soon. Whether a “real estate tsunami” hit the Metropolitan areas after pre-selling apartments in Pangyo will act as a barometer of house prices in Gangnam and Metropolitan area, added Kim.

Seung-Heon Lee ddr@donga.com imsoo@donga.com