The Gangnam housing market may return to an upward trend next year after a short-term adjustment, according to analysts. This comes amid ongoing population concentration in the metropolitan area and persistent supply shortages, which could exacerbate regional polarization in the housing market.
On September 3, the Korea Housing Association held a seminar at the Construction Hall in Gangnam, focusing on 'Real Estate Outlook and Trend Analysis, Future Strategies for Construction Companies.'
During the event, Ko Jong-wan, head of the Korea Asset Management Institute, discussed market forecasts and strategies for construction companies in his presentation titled 'Real Estate Market Outlook and Housing Business Strategies.'
He stated, "The current Gangnam housing market has entered a short-term adjustment phase due to tax and loan regulations, but I believe this adjustment will not last long. There is a high possibility that the market will turn upward around March next year."
Ko emphasized that the most critical factor determining housing prices in Seoul is supply. He noted, "Considering the planned supply volume, it is unlikely that the supply shortage in Seoul will be resolved in the short term, which means there is a possibility of continued upward trends over the next two to three years."
He added, "While the Gangnam area is experiencing price adjustments due to regulations and tax burdens, demand has not disappeared. Once urgent sales are exhausted and policy impacts are reflected in the market, upward pressure from supply shortages may re-emerge."
Ko identified rental prices as a key variable influencing future housing prices in Seoul. He explained, "Rental prices serve as a leading indicator for sales prices. When rental prices rise, monthly rents respond immediately, and typically, sales prices are affected with a lag of three to six months."
He further stated, "The more supply is lacking, the higher rental prices will rise, which can stimulate sales prices again. Given that it takes a long time to supply apartments in Seoul, it is necessary to also expand the supply of non-apartment housing such as villas and officetels."
In a subsequent presentation, Kim Hyo-sun, a senior real estate expert at KB Kookmin Bank, addressed the topic 'Shifts in Housing Industry Direction Due to Rapidly Changing Real Estate Trends,' analyzing recent structural changes in the housing market and the industry's response.
Kim noted, "Despite various regulatory intensifications, the strong demand for housing in the metropolitan area is driven by population concentration and supply shortages. There is a significant likelihood that the long-term trend of supply imbalance, with excess housing in the provinces and shortages in Seoul, will continue."
He observed, "Seoul housing prices have shown a pattern of stagnation when financial regulations are tightened, followed by a rebound when the impact weakens. Recently, demand from those in their 20s and 30s, as well as single-person households, has entered the market, which could lead to continued increases in both sales and rental prices."
From a supply perspective, Kim explained that rising construction costs are widening the gap between regions. He stated, "As the volume of new housing in Seoul continues to decline, new supply is primarily concentrated in key areas that can bear high construction costs, while outer regions, where securing project viability is challenging, may see a buildup of aging housing, exacerbating residential polarization within Seoul."
He added, "Given that it is physically difficult to lower construction costs, there is a need to change the existing supply methods that are applied uniformly. We should consider new supply methods that can lower costs and allow consumers to have choices."
Additionally, he pointed out that restrictions on transactions after obtaining approval for reconstruction and management disposal in redevelopment can delay the progress of maintenance projects. He suggested that regulations on transactions should be eased to allow buyers who wish to purchase new constructions while bearing the costs to do so, and that regulations on relocation loans should also be further relaxed.
* This article has been translated by AI.
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