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Seoul’s old, small-sized apartment prices spike amid market bubble


(Yonhap)
(Yonhap)

Notwithstanding the Moon Jae-in administration’s efforts to cool down the real estate market, ordinary homeseekers are feeling overwhelmed by escalating prices in Seoul, industry data showed Wednesday.

The consumer sentiment for housing prices this month hit the second-highest level, prolonging an uptrend for two months straight.

According to the monthly housing price trend report compiled by KB Kookmin Bank, the average price of small-sized apartments in Seoul came to 413.8 million won ($346,305) as of July.

This is the first time that the corresponding figure exceeded the milestone since the bank started compiling such data in January 2016.

Small-sized apartments -- less than 40 square meters -- are mostly located in the city’s underdeveloped outskirts such as Nowon-gu, Dobong-gu, Gangbuk-gu, Geumcheon-gu, and Guro-gu.

An apartment in Sanggye Jugong Complex in Nowon-gu was traded at 660 million won earlier this month, up 110 million won from about a month ago. The 31.9-square-meter residence was built in 1987.

In the more affluent and popular Gangnam area, residences priced at over 1 billion won are common -- mostly those that face imminent reconstruction or remodeling.

Also, Seoul’s small and medium-sized apartments -- ranging from 40 square meters to 62.8 square meters -- saw their average price surpass the 700 million won mark this month, the KB report showed.

“Lower-priced, small apartments have marked the steepest price hike, as panic-driven end users flocked to the market in the wake of enhanced loan rules,” said Park Won-gab, a senior researcher of KB’s real estate team.

The bank classifies apartments under five categories according to their exclusive use area. Of them, the small-sized group saw its average price hike 13.3 percent from end-December to end-July. Large-sized apartments of 135 square meters or more marked a 6.2 percent climb during the same period.

The heated market reality was also reflected in the latest market sentiment index.

According to the consumer trend report from the Bank of Korea, the consumer sentiment index for the housing market here marked 125 points for July, up 13 points from the previous month.

A CSI reading above 100 indicates that more consumers expect economic conditions to improve or prices to escalate.

This latest figure was also the second-highest since the 128 points observed in September 2018 -- when the government unveiled its landmark regulatory package dubbed the Sept. 13 measures.

“It is possible that the figure may soon surpass (the record-high) 128, given the soaring housing prices,” said an official of the central bank.

By Bae Hyun-jung (tellme@heraldcorp.com)
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