Housing prices skyrocket in southern Seoul

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Housing prices skyrocket in southern Seoul

Median apartment prices in southern Seoul have surpassed 700 million won ($627,521) for the first time in almost a decade, largely due to the reconstruction boom.

According to KB Kookmin Bank’s monthly report released Sunday, the apartment prices in 11 districts in southern Seoul rose by 25 million won from 696 million won in August to 716 million won last month. The KB said it is the first time for the price to exceed 700 million won since Dec. 2008, which is when the bank started to compile the data in its current form.

“Housing prices rose 0.31 percent in Seoul and 0.59 percent in Gangnam District in September compared to the previous month,” said the KB Kookmin Bank in a report. “Prices in southern Seoul soared largely due to the ongoing reconstruction in the region and a big underground project going on at Yeongdong Boulevard.”

Southern Seoul’s 11 districts include affluent areas such as Gangnam, Seocho and Songpa. According to the report, the prices in 11 districts rose 1 million won to 13 million won every month this year compared to the previous month, except for February. In fact, the prices rose 34 million won just during August and September, and accounted for 60.2 percent of the increased amount of prices this year.

“Korea’s interest rate remains very low at 1.25 percent and there are many Koreans speculating through houses in the Seoul metropolitan area where reconstruction has been going on,” the report said.

In September, the average purchase price for a residence, including apartments and houses, recorded 612 million won, and this was also the first time for the figure to surpass 600 million won.

The price for jeonse, a lump-sum deposit payment, in 11 districts of southern Seoul recorded 388.4 million won and the figure for Seoul as a whole recorded 334.9 million won. The average jeonse price in Korea was 204.9 million won as of September.

“Jeonse prices rose 0.10 percent compared to the previous month and 0.15 percent in the Seoul metropolitan areas as more house owners prefer giving a monthly rent over jeonse,” said the report.

Industry insiders expect the housing prices to continue to grow this month as October tends to be a month when many Koreans relocate. In fact, the apartment prices in Seoul have been going up 0.3 percent for the past two months.

According to the report, Daegu and Ulsan saw housing prices drop compared to the previous year, and the bank cited the large number of available units in such regions as the main reason for the decline.

“Ulsan’s housing prices continued to fall for the sixth consecutive month,” the report added, “and it appears that the demand for houses dropped significantly compared to the past due to the slow regional economy dragged down by ongoing corporate restructuring.”

BY KIM YOUNG-NAM [kim.youngnam@joongang.co.kr]

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