New solutions needed for Gangnam housing fever

“Do you know how much the land costs? It’s absolutely not overpriced.”

In 2021, Raemian One Bailey in Seocho-gu, Seoul—considered a flagship property in the apartment market—was released at a record price of 56.53 million won per 3.3 square meters. The launch drew intense criticism for its pricing, despite being under the government’s price ceiling. At the time, one expert involved in the pricing process told this reporter that the controversy was unjustified.

That remark resurfaced recently as Raemian One Bailey’s prices surged again. On March 3, an 84-square-meter unit, considered the “standard layout,” sold for 7 billion won. That equals 20.59 million won per 3.3 square meters—3.6 times the original sale price. Just three months after a larger 133-square-meter unit in the same complex traded at over 20 million won per 3.3 square meters, even the standard unit has now crossed that mark.

Perhaps more notable than the price is the timing. December 2023 was a period of cooling sentiment, with tighter loan restrictions and political turbulence due to impeachment proceedings. Though Seoul’s recent decision to lift land transaction permit zones in areas like Jamsil, Samsung, Daechi, and Cheongdam stirred the market, Seocho was never part of the restricted zone.

This shows that demand for apartments in southern Seoul—especially Gangnam—is largely unaffected by financial regulations. While buyers in these areas often have abundant assets, a more powerful driver is their strong belief that prices will continue to climb. There is solid demand for securing a single, high-quality property in this region.

Experts say this trend has intensified. During the Moon Jae-in administration, housing prices rose nationwide, but Gangnam rose even faster. Since last year, however, only Gangnam’s prices have continued to rise, while other areas have mostly flattened or declined.

For individual buyers, this behavior is rational. Housing price gaps directly translate into wealth gaps, and heavy taxation on multiple homeowners remains in place. Gangnam has the best infrastructure, jobs, transportation, and education, making it highly livable.

Education, in particular, is a decisive factor. Many parents say that there is no alternative to Gangnam when it comes to education. Even within Seoul, educational inequality is growing. Since the 2020s, seven schools in the capital have shut down due to declining enrollment. The century-old Dongseong Middle and High School in Jongno District is considering relocating to Songpa District. A private tutor noted, “Ten years ago, there wasn’t much difference between the tutoring districts of Daechi-dong, Mok-dong, and Junggye-dong. Now Daechi-dong far outpaces the others in both scale and quality.”

On March 19, Seoul designated all apartments in Gangnam’s three districts and Yongsan as land transaction permit zones. After prematurely lifting restrictions and triggering a price surge, the city reversed course just 35 days later, expanding the regulation zone in a drastic move. Officials said they may extend the current restriction period, set to expire in September, if market overheating continues. Still, emergency controls cannot last forever. They must eventually be lifted—and if that happens without proper preparation, suppressed demand could bounce back like a spring.

To prevent another policy misfire, the city must increase housing supply while offering incentives to disperse concentrated demand for Gangnam’s “smart single properties.” Addressing educational inequality could be a start. If the outer districts of Seoul are equipped with high-quality schools that reduce the need for private tutoring, fewer families may feel compelled to stretch their finances just to live in Gangnam for their children’s education.