The price gap between Seoul's most expensive and more affordable apartments has narrowed for eight consecutive months. The shift owes less to steep declines at the top end than to faster price gains among cheaper units. Analysts say the burden has in fact grown for non-homeowners and owner-occupier buyers hoping to buy into the capital.
Seoul's apartment quintile ratio stood at 6.28 in September, according to KB Real Estate data released on the 2nd. The measure peaked at 6.92 in January before falling for eight straight months from February.
The quintile ratio divides apartments into five price bands and compares the average price of the top 20% with that of the bottom 20%. A lower reading means a smaller gap between high-priced and low-priced apartments.
Loan Caps Push Up Mid- and Low-Priced Apartments
The decline in the ratio stems largely from mid- and low-priced apartments rising faster than expensive ones. The average price of Seoul's bottom-quintile apartments reached 552.92 million won last month, up 2.13% from 541.38 million won a month earlier. That marks a 10.39% gain from January, when the figure was 500.84 million won. Second-quintile prices also rose 2.07% over the month.
Top-quintile prices, by contrast, edged up just 0.42%, from 3.45998 billion won in August to 3.47456 billion won in September. The bottom quintile's gain was roughly five times that of the top.
Lending restrictions have played a significant role in the trend, analysts said. The government last year capped mortgage borrowing at 600 million won for apartments priced at 1.5 billion won or less. The limit falls to 400 million won for homes between 1.5 billion and 2.5 billion won, and to 200 million won above 2.5 billion won. Buyers with thinner finances have turned to mid- and low-priced apartments, where they can borrow more, driving those prices higher.
Acro River Park Trades 600 Million Won Below May Peak
Prices of cheaper apartments have indeed jumped. A 59-square-meter unit at Jeongneung Pungrim Iwon in Seongbuk District sold for 598 million won last month, according to the Ministry of Land, Infrastructure and Transport's transaction disclosure system. That is 83 million won above the record 515 million won logged in March.
Some high-priced apartments, meanwhile, changed hands below their previous peaks. An 84-square-meter unit at Acro River Park in Seocho District sold for 5 billion won in September, down from a record 5.6 billion won in May.
District-level price indexes show the same split. Gangnam District apartment prices fell 0.3% last month from August. Seocho and Songpa districts rose 0.31% and 0.70% respectively, both trailing the 1.13% average gain across Seoul.
Northern Districts and Smaller Units Lead Gains
Districts with large stocks of mid- and low-priced apartments posted the strongest gains. Nowon District prices rose 2.32% in September from the previous month, followed by Jungnang at 2.20%, Dobong at 1.95%, Seongbuk at 1.93% and Gangbuk at 1.90%.
By size, cheaper small units led. Prices for Seoul apartments of 60 square meters or less rose 1.60% in September from August, far outpacing the 0.21% gain for units larger than 135 square meters.
Rising prices for cheaper apartments weigh on non-homeowners buying a home to live in who want to move into Seoul. "Demand appears to be concentrating on mid- and low-priced apartments where buyers can borrow slightly more, and that is pushing prices up," an industry official said.
