Seoul apartment prices rose for an 86th consecutive week, setting a record for the longest run of gains, even as the pace of increase slowed for a fifth straight week. Declines deepened in the three southern Gangnam districts, Yongsan District slipped into negative territory, and districts outside Gangnam that had propped up the market are losing momentum. Analysts said that if Gangnam weakness persists and gains outside the area keep narrowing, it is difficult to rule out the possibility that Seoul's overall price growth turns negative around the end of the year.
Seoul apartment sale prices rose 0.09% from the previous week as of Sept. 28, according to weekly apartment price data for the fourth week of September released by the Korea Real Estate Board on the 1st. That extended the city's winning streak to 86 weeks since the first week of February last year, surpassing the previous record of 85 weeks, which ran from the second week of June 2020 to the third week of January 2022 under the Moon Jae-in administration.
Even as the record fell, the upward momentum is fading quickly. Weekly growth in Seoul apartment prices slowed to 0.22% in the fifth week of August from 0.29% in the fourth week, then eased further to 0.20% in the first week of September, 0.16% in the second, 0.13% in the third and 0.09% in the fourth. Five straight weeks of smaller gains have cut the pace of increase to about one-third of its level a month earlier.
Downward pressure is clearest in the Gangnam area. Prices in the southeastern zone, which includes the four Gangnam districts, fell 0.26% this week, a steeper drop than the 0.21% decline a week earlier. The zone has posted five consecutive weeks of widening declines — minus 0.12%, 0.13%, 0.16%, 0.21% and 0.26% — after rising 0.03% in the fourth week of August.
Gangnam District fell 0.56% in a week, while Seocho District and Songpa District dropped 0.33% and 0.19%, respectively. Gangnam District in particular has recorded declines of 0.11%, 0.41%, 0.35%, 0.36%, 0.42% and 0.56% over the past six weeks, showing increasingly pronounced weakness.
The correction is spreading beyond Gangnam. Yongsan District swung to a 0.01% decline this week from a 0.02% gain the previous week. Yongsan had posted gains of 0.04%, 0.09%, 0.10%, 0.07% and 0.02% over the past six weeks before turning negative.
Outlying areas of Seoul and districts with many apartments priced below 1.5 billion won ($1.1 million), by contrast, are still holding up the citywide index. Seodaemun District rose 0.41%, Dongdaemun District and Seongbuk District each gained 0.36%, Nowon District rose 0.34%, Gangbuk District 0.31% and Geumcheon District 0.25%.
Even in those areas, however, the slowdown is visible. Growth in the northeastern zone eased to 0.28% from 0.33%, the northwestern zone to 0.18% from 0.23% and the southwestern zone to 0.16% from 0.20%.
Analysts point to the depth of the Gangnam decline and the staying power of districts outside the area as the variables that will determine the direction of Seoul home prices. If Gangnam weakness continues while gains narrow even in mid- and low-priced areas such as the northeastern and northwestern zones, which have supported the overall index, Seoul prices could enter a flat or declining phase around the turn of the year, they said.
Yoon Su-min, senior real estate specialist at NH NongHyup Bank, said: "We expect Seoul home prices to turn lower by the end of this year at the earliest, or early next year at the latest. If declines in Gangnam continue and gains in the northeastern and northwestern zones also narrow, we cannot rule out the possibility that the citywide index turns negative." He added: "With prices having risen a great deal recently, the fact that lending curbs are reducing the funds that can flow in and that transaction volumes have also fallen is adding to downward pressure. In particular, in the market for homes priced at 1.5 billion won or less, demand from buyers looking to trade up to better locations is being blocked, which could slow the circulation of transactions."
Rising funding costs are also cited as a factor that could weaken gains outside Gangnam. Shin Bo-yeon, a professor of real estate AI at Sejong University, said outlying districts are currently supporting Seoul's growth rate but are themselves affected by higher interest costs, aggregate lending caps and various mortgage restrictions. "At the end of the year, banks sometimes raise their own loan spreads, so funding conditions could worsen further," the professor said. "If this trend continues, growth in Seoul apartment prices could fall to around 0.01% by year-end." Next year, however, a shortage of new homes ready for occupancy and limited supply of jeonse (a lump-sum deposit lease) and monthly-rent housing could again push prices higher, the professor said.
Others expect Seoul prices to hold at or above a firm flat line through the end of the year. Nam Hyuk-woo, a researcher at Woori Bank, said: "Since price strength in mid- and lower-tier districts has not weakened sharply, gains at or above a firm flat level could continue through year-end. After that, the level of interest rates and whether tax reform measures are eased will determine where prices go."
