Seoul Homebuyers Shift to Smaller Units as New-Home Prices Surge

With Seoul’s new-apartment presale prices in the mid-50 million won range per 3.3 square meters, the subscription market is shifting quickly. As construction costs jump and loan rules tighten, buyers are increasingly turning away from the standard 84-square-meter unit and concentrating on smaller homes.
 
According to the redevelopment industry on April 23, the winning score cutoff for the 84-square-meter units at “Ra Clache Zide Fine,” recently offered in Seoul’s Dongjak district, was 62 points, below expectations. With presale prices reaching the 2.5 billion won range, demand thinned because entry is difficult without substantial cash on hand.
 
Smaller 59-square-meter units told a different story. They posted an average competition rate of 39.8-to-1, well above the overall average of 26.9-to-1, and the winning cutoff reached as high as 74 points — higher than the 84-square-meter units. High-score applicants and end users crowded into the less expensive sizes, making small units harder to win.

The same pattern has appeared across major Seoul offerings. At “Raemian Elavine” in Banghwa-dong, Gangseo district, the 59㎡B type drew 228.8-to-1 competition and required 69 points, the maximum for a four-person household. The 84㎡B type drew 16.1-to-1, and the minimum winning score fell to 50 points, a gap of nearly 20 points.
 
At “The Sharp Priella” in Mullae-dong, Yeongdeungpo district, all 59-square-meter types had a 69-point cutoff, while the 84㎡B type formed a winning range at a low of 62 points.
 
Even at the ultra-high-priced “Otier Banpo” in Seocho district, smaller units led. The 44-square-meter type recorded 622.8-to-1 competition and an average winning score of 76.5 points — more than 6 points higher than mid-to-large types such as the 84㎡A (70.67 points) and 97.6㎡ (69.5 points). Analysts say as prices and loan barriers rise, high-score applicants are giving up space to enter top neighborhoods, deepening the score divide by unit size.

Real estate data firm Real Estate R114 said 218,047 people applied last year for units of 60 square meters or less in the Seoul metropolitan area, surpassing for the first time the 217,322 applicants for mid-size units of 60 to 85 square meters. In Seoul, 59.7% of applicants — about six in 10 — chose small units.
 
The shift is widely attributed to steep price increases and strict lending rules. As of early this year, the average presale price in Seoul was about 1.89 billion won for an 84-square-meter unit, compared with about 1.4 billion won for a 59-square-meter unit, a difference of roughly 490 million won. Factoring in acquisition tax and loan interest, the perceived gap exceeds 500 million won.
 
Relief on construction costs also appears distant. The Korea Institute of Civil Engineering and Building Technology said the construction cost index in February rose 2.04% from a year earlier to 133.69, extending a record-high streak to six straight months.
 
Experts say as long as high interest rates and loan restrictions persist, end users will keep lowering expectations to homes they can realistically win. Supply concerns are also growing as unstable materials procurement delays project starts, potentially pushing up the value of smaller units with lower entry barriers. KICT data show the materials supply index last month fell 16.7 points from the previous month to 74.3; readings below 100 indicate more companies view conditions negatively than positively.
 
Baek Sae-rom, a senior researcher at Real Estate R114, said that as one-person households increase and household formation accelerates, rising presale prices are prompting buyers who initially considered 84-square-meter units to “lower their expectations and change their options to match price levels.” With shrinking household size and heavier financing burdens, she said, the preference for smaller units is likely to become even more pronounced.