[Deep Dive] Seoul Metropolitan Real Estate Prices: Rising Buying Sentiment

Diffusion of Buying Sentiment and Expanded Price Index Gains

According to the weekly apartment price trends by the Korea Real Estate Board (as of July 6), real estate prices in Seoul and the metropolitan area are recording a distinct upward trajectory. The fluctuation rate of the Seoul apartment sales price index stood at +0.30%, widening its gains from the previous week (+0.27%), while the metropolitan area also rose by +0.22%. In particular, key core areas in Gyeonggi-do, such as Dongtan-gu in Hwaseong (+1.29%) and Yeongtong-gu in Suwon (+1.19%), led the overall upward trend, signaling a diffusion of buying sentiment across the broader capital region. A structural characteristic observed is the concentration of actual demand centered around large-scale apartment complexes near transit hubs.

Surge in Higher-Priced Transactions and Pressures from the Jeonse Market

The most prominent indicators are transaction volume and the proportion of transactions executed at higher prices. Among the nationwide apartment sales transactions in June, the proportion of higher-priced trades reached 47.3%, and in Seoul, a staggering 57.1% of transactions were executed at prices higher than previous deals. This implies that buyers are entering the market accepting the elevated asking prices, rather than prices rising on quotes alone. Simultaneously, the Jeonse (lease) market also saw increases of +0.31% in Seoul and +0.20% in the metropolitan area, providing solid downside support for sales prices. The concentration of demand for complexes with excellent educational districts and transportation infrastructure is pushing up Jeonse prices, acting as a primary driver for the rise in sales prices.

Policy Variables and Market Outlook

To curb signs of overheating, the government announced market stabilization measures in late June, including the designation of additional regulated areas; however, their cooling effect on buying sentiment is currently evaluated as limited. Market attention is now focused on the proposed real estate tax (holding and transaction taxes) reform plan scheduled for release in late July. While macroeconomic uncertainties remain, the limited upward trend driven by actual demand is likely to persist in the short term. Nevertheless, depending on the specific direction of the tax reform and interest rate volatility, the trajectory of real estate prices in the second half of the year could be restructured. Investors and end-users alike must closely monitor policy risks.