As Seoul residents flee, apartment prices jump in nearby areas

A bird's-eye view of apartments in Seocho, southern Seoul. [YONHAP]

Koreans are fleeing Seoul and moving to nearby areas due to soaring apartment prices, neighborhoods targeted becoming more expensive as a result.

According to Statistics Korea, 44,118 people left Seoul between January 1 and May 31 this year on a net basis, with an average net outflow of 8,823 per month. Net outflow is calculated by subtracting the number of people moving out from the total number moving in. At this rate, net outflow would total 100,000 people this year, up 54.2 percent on year.

More Seoulites are leaving, and rising apartment prices is the biggest cause. People are unable to afford apartments in high-end neighborhoods or even in places that were once considered cheap.

“High apartment prices is the biggest contributing factor,” said Kwon Dae-jung, a professor of real estate studies at Myongji University. “People who leave Seoul mostly find new homes at Gyeonggi, Incheon and new towns where it’s possible to commute to offices in Seoul.”

Among the total 140,700 people who left Seoul last year, 56.6 percent cited high apartment prices as the main reason.

Data from KB Kookmin Bank’s Liiv Real Estate indicate that average Seoul apartment prices were 1.14 billion won in June, up 23.5 percent on year. Jeonse prices were 627 million won, up 17.86 percent on year.

People have left Seoul to avoid high apartment prices, but the recent exodus is fanning price surges in areas bordering Seoul, such as Incheon and Gyeonggi. Those areas are considered to be cheap but close enough to Seoul, becoming popular among people moving out.

Apartment prices in Gyeonggi jumped. Average apartment prices in Goyang rose 45.6 percent on year in June, Gimpo 45 percent, Uijeongbu 44.5 percent, Ansan 37.7 percent, Siheung 37.6 percent and Yongin and Gwangju both 37.4 percent.

“Demand is rising in Incheon, Hwaseong and Bucheon, which have missed the recent surge,” said Ham Young-jin, head of Zigbang’s big-data lab. “As apartment prices are being pushed up, the prices of cheaper low-rise housing units are also rising.”

The government recently changed its strategy for controlling price increases, from regulating to increasing supply.

But this takes time and can run into roadblocks.

A plan to build 4,000 government-leased apartments in Gwacheon, Gyeonggi was scrapped in June due to strong resistance by residents. The residents argued that they would rather have a park than government-leased apartments.

Government-leased apartments are often for low-income families. Residents and landlords worry the buildings would hurt the neighborhood’s image and drive down values.

Plans to build 10,000 government-leased apartments at the Taereung Golf Course, owned by the government, are also facing similar resistance as residents demand the government turn the golf club into a public park that would benefit the community.

On June 11, Land Minister Noh Hyeong-ouk said the ministry will reduce the number of houses to be built in Taereung and is in talks with local governments to find alternative sites to build the government-leased apartments.

“If Seoul apartment and jeonse prices fail to stop climbing, Seoulite outflow and price hikes in greater Seoul are likely to continue,” said Myongji University professor Kwon Dae-jung.

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr],SOHN HAE-YONG