Apartment complexes in northern Seoul as seen from N Seoul Tower. / Reporter Kwon Do-hyun

Apartment prices in Seoul are showing signs of a significant uptick. The upward trend that began earlier this year in the so-called “Gangnam 3 Districts,” Gangnam-gu, Seocho-gu, and Songpa-gu, as well as in Yongsan-gu, is now spreading to the northern parts of the city. Even the recent re-designation and expansion of areas subject to permission of land transaction has done little to stem the rise in both prices and transaction volumes. In key areas of Seoul, homeowners are pulling listings off the market in anticipation of further price increases. Some observers are now voicing concerns that the long-held belief of “home prices go up when the Democratic Party of Korea (DPK) comes to power” may be coming true.

Experts warn that a shortage in housing supply in the Seoul metropolitan area, coupled with expectations of interest rate cuts, could ignite a sharp rise in housing prices in the capital regardless of the overall economic slowdown. They argue that clear government policy direction is urgently needed on housing supply, taxation, and mortgage regulations, topics that were not thoroughly addressed during the presidential campaign.

According to data released by real estate platform Zigbang on June 10, the proportion of upward apartment transactions last month in Seoul’s Seongbuk-gu, Nowon-gu, and Geumcheon-gu ranged from 44.5 percent to 46.8 percent, marking a 4.5 to 4.6 percentage point increase compared to April. These increases outpaced the citywide average, signaling that price optimism has spread north of the Hangang River.

The surge in the Gangnam 3 Districts and Yongsan-gu is already steep. According to the Korea Real Estate Board’s latest apartment price trend report, while apartment prices nationwide have declined by 0.34 percent so far this year, prices have jumped 5.61 percent in Gangnam-gu, 5.17 percent in Seocho-gu, 6.13 percent in Songpa-gu, and 2.87 percent in Yongsan-gu. Even transaction volumes in these areas began rebounding in May. Data from Seoul Real Estate Information Plaza show that, as of June 10, there were 482 apartment sales transactions in these four districts, already surpassing April’s total of 324.

A local realtor near Mapo Raemian Prugio apartment in Mapo-gu said, “All the listings that were previously on the market have been snapped up. Even sellers who initially intended to sell are now raising their asking prices by 50 to 100 million won at once.”

Concerns are mounting that the real estate frenzy of 2017 could repeat itself. Observers emphasize the need for the new administration to quickly outline its housing policy. During his campaign, President Lee Jae-myung said that he would not try to curb housing prices through taxation. However, beyond broad promises to “expand supply,” he has yet to provide concrete details. With the housing market stagnating under former President Yoon Suk-yeol’s three-year tenure and supply concerns at a peak, the absence of a clear plan from the new government is causing additional instability.

Kim Kyung-min, a professor of urban planning at Seoul National University, said, “The government must open up large-scale housing supply markets in Seoul and shift demand from existing houses to new developments.” He mentioned the Yongsan International Business District and government-owned idle land in Sangam-dong as potential areas. “The housing shortage issue is strictly confined to Seoul,” he added. “The Seoul City government should quickly secure land and work with the central government to speed up the development process.”

Even if the new administration starts taking action now, it would take 3 to 5 years for newly planned housing to actually hit the market. Experts warn that if prices rise in the meantime and the government resorts to patchwork regulations, it could repeat the policy missteps of the Moon Jae-in administration.

Some argue that government-backed mortgage programs also need to be re-evaluated. The Yoon administration expanded such programs during the housing slump, injecting 40 trillion won through special mortgage products from 2022 to 2023. The newborn household loan, which offers up to 500 million won per household and loosened income restrictions (available to couples earning under 200 million won annually), is also ongoing. Additionally, the “first-time homebuyer LTV 80 percent” program launched in August 2022 allowed first-time buyers to borrow up to 600 million won regardless of income or property price, which is significantly above the typical 60 to 70 percent loan-to-value (LTV) ratio.

Park Sun-young, an economics professor at Dongguk University, questioned the direction of these policies, saying, “Is it really appropriate to tell newlyweds and young families, who should be the main beneficiaries of policy support, to take out large loans to buy expensive homes? Supplying such large volumes of policy-driven loans may actually hinder housing price stability rather than help it.”

There are also calls for the new government to clarify its stance on mortgage regulations, especially as fiscal stimulus increases and interest rates continue to fall.

Park Won-gap, Chief Real Estate Analyst at KB Kookmin Bank, said, “When liquidity increases, the high-end housing market reacts first. Managing home prices while the money supply grows is not easy, so appropriate mortgage regulation levels are crucial.”

Some suggest that easing restrictions on owners of multiple homes could reduce the market’s current focus on securing a single, high-value property. However, critics argue that this preference is more influenced by declining population and changes in investment strategies, not just by policy, and that lifting regulations could further inflate home prices in Seoul. “If we hastily ease restrictions on multi-homeowners, it may only serve to drive up prices further in the capital,” Park said.