South Korean housing market sees rising apartment prices amid supply concerns

South Korea is experiencing significant volatility in its real estate market, characterized by rising apartment prices in Seoul and Gyeonggi Province despite fluctuating transaction volumes. In Seoul, apartment prices have seen a rapid ascent, nearing an 85-week continuous increase record, with cumulative growth of 17.4% over the past 84 weeks. This trend is driven largely by concerns over housing supply shortages and uncertainties regarding future construction starts.

Research from the Korea Research Institute for Human Settlements indicates that a 0.25 percentage point increase in interest rates typically leads to a 1.2% drop in national apartment prices after six months. However, current market dynamics show a complex relationship between interest rates and prices, as Seoul's prices have risen even as market rates increased. In Gyeonggi Province, apartment prices have risen for 53 consecutive weeks, accompanied by a rise in Jeonse (lump-sum deposit) prices, increasing the housing cost burden for residents.

While transaction volumes in Seoul have recently dropped significantly, record-high prices continue to be reported in various districts. Experts suggest this differs from previous market crashes due to robust demand and supply constraints. Additionally, recent data shows an upward revision in expected apartment move-in volumes for Seoul in 2027, partly due to the inclusion of large-scale reconstruction projects like Banpo DH Class in updated forecasts.