SEOUL, July 4 (Korea Bizwire) – The average home price in Seoul has surpassed 500 million won (US$434,103) last month, with analysts expecting more price jumps within this year to reach a new high, a market study by KB Kookmin Bank showed Monday.
The average home price in the capital city hit 501.98 million won in June, up 2.94 million won from the previous month, according to the bank which serves as the leading tracker of the local housing market. The figure is the highest since the bank began compiling related data in December 2008.
Private homes were the most expensive, averaging at 694.23 million won, followed by apartments (562.92 million won) and smaller multi-unit homes (251.93 million won).
The average price curve peaked at 480 million won in June 2011 and trundled along before dropping to 440 million won in 2013. It started recovering from early 2015, the study indicated.
The southern part of Seoul, known as Gangnam, gained more than the northern districts, 69.13 million won compared to 40.63 million won. Analysts said the reconstruction boom, in which aged apartments are tore down and rebuilt, in Gangnam contributed to the price hike.
Apartment prices in Seoul rose 1.13 percent, much higher than the country’s average of 0.37 percent, led by the rise in Gangnam, the study showed. Analysts say home prices in the southern part of the city may well exceed 600 million won in the latter half of this year.
Rising rental fees are also likely to push up home prices, analysts said. Seoul is short of homes leased under “jeonse,” a housing rental system in which the tenant pays a lump sum that is later returned. The rising jeonse price is pushing renters to buy homes, increasing demand, they said. In some parts of Seoul, the jeonse price has reached as high as 80 percent of the home price.
A market watcher at Woori Bank agreed that home prices will increase more this year in Seoul.
“But the volume of home transactions may slow down a little, pending government policies and their effects,” he said.