Apartment transactions in Seoul's Han River belt fell sharply in the third quarter, as a slowdown that began in the Gangnam area spread to districts including Mapo, Seongdong, Gwangjin and Dongjak. Tighter mortgage rules and tax changes, combined with rising interest rates and a growing sense that prices have peaked after a steep run-up, cut transactions in the Han River belt — home to many high-priced apartments — by more than half from a year earlier, following declines in the three Gangnam districts and Yongsan. Some analysts say further rate increases could bring falling transactions and price corrections to lower-priced districts next year.
Seongdong recorded the steepest drop in apartment transactions in Seoul in the third quarter, according to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system on Oct. 26. Transactions in the district fell 75.6% to 213 from 873 in the same quarter a year earlier. Gwangjin followed with a 62.1% decline, then Mapo at 59.7%, Gangdong at 55.4%, Dongjak at 54.2% and Yongsan at 50.0%. The sharpest contractions came in the main Han River belt districts, which command the highest prices after the Gangnam area.
Transactions in the three Gangnam districts — Gangnam, Seocho and Songpa — fell 34.8% to 1,299 from 1,991 over the same period, a smaller decline than in the main Han River belt districts. For the first nine months of the year, transactions in Seongdong dropped 68.2%, while Gwangjin and Mapo fell 57.1% and 56.9%. Those declines were more than three times the 13.9% drop in citywide apartment transactions over the same period.
Analysts describe the pattern as a transaction cycle, in which a slowdown that starts in high-priced districts moves through the Han River belt and then to the outskirts. Transactions in the three Gangnam districts peaked in the first quarter of last year and began falling in the second quarter. In Mapo, Seongdong, Dongjak and Gwangjin, volumes peaked later, in the second quarter of last year. With transactions falling first in the Gangnam area and the slowdown then moving into the Han River belt, the belt posted the larger declines in the third quarter of this year.
Citywide transactions have also turned lower. Apartment transactions in Seoul from January through September rose steadily from 9,926 in 2022 to 28,108 in 2023, 44,941 in 2024 and 59,804 last year, before falling to 51,463 this year. Analysts attribute the decline to heavier financing burdens from mortgage restrictions and rising interest rates, as well as to buyers moving to the sidelines after a rapid run-up in prices.
As transactions have thinned, listings have piled up. Based on figures as of the 26th of each month — the 25th for September — apartment listings in the three Gangnam districts and the main Han River belt districts were at their highest levels of the year in October, according to real estate data platform Asil. Listings in Seongdong rose the most, up 140% from January. Songpa followed with a 93% increase, then Dongjak at 85%, Mapo at 82%, Yeongdeungpo at 79%, Yongsan at 75%, Gangdong and Gwangjin at 72%, Seocho at 63%, Dongdaemun at 57% and Gangnam at 56%. With listings rising while buying interest weakens, some analysts say the slump in transactions could be prolonged.
Transactions rose sharply, by contrast, in outer districts of Seoul where lower-priced apartments are concentrated. Third-quarter transactions in Dobong climbed 51.7% from a year earlier, followed by Geumcheon at 51.0%, Nowon at 33.0% and Jungnang at 14.2%. The increase largely reflects stronger purchase demand driven by a shortage of jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent). With jeonse units hard to find, owner-occupier buyers are turning to purchases and choosing relatively cheaper districts that fit the loan limits set by home price bracket.
Experts expect the slowdown to reach outer districts next year, bringing price corrections. "The cycle of falling transactions can move from the Gangnam area to the Han River belt and then on to the outskirts, including the northeast and southwest," said Yoon Su-min, senior real estate specialist at NH NongHyup Bank. "Nowon, Dobong and Gangbuk could see transactions fall and prices decline as early as the first half of next year." Yoon added, "Still, with new supply limited and the jeonse shortage continuing, a sharp price drop like those in the past is unlikely."
Hahm Young-jin, head of the real estate research lab at Woori Bank, said transactions are unlikely to fall off a cliff. "Owner-occupier buyers in their 30s keep entering the market, and the jeonse market remains badly strained, so it will be hard for transactions to drop sharply," he said. "After last year's surge, volumes are falling this year and that trend will continue into next year because of interest rates and the tax overhaul."