Property in Gangnam — a trio of exclusive districts in South Korea’s capital, Seoul — is beginning to buckle as the central bank’s yearlong tightening cycle weighs on the luxury real estate market.
Apartment prices in all Gangnam districts have declined for four consecutive weeks, data from the Korea Real Estate Board show, portending the first monthly decline since the Bank of Korea began raising its key rate last August. The hit to Gangnam signals the impact of policy tightening is now reaching into the upper stratum of Korea’s 51 mn people.
While Governor Rhee Chang-Yong said that housing correction was unavoidable and has a desirable element, concern over the property market and household debt are among factors that have prompted the BOK to return to smaller rate increases.
Gangnam apartments make up an overwhelming majority of Seoul homes factored into the Knight Frank Prime Global Cities Index, which has slowed after rising last year at the fastest pace since 2008.
The cooling momentum among the world’s most desirable and expensive 5% of homes coincides with the start of the Federal Reserve’s rate increases and rising concern about a global recession. Apartments tracked by Knight Frank include Raemian Dogok County, which costs up to 3.8 bn won ($2.8 million) per unit, and Acro River Park, priced at as much as 22 billion won. Samsung Tower Palace 3rd traded for up to 7.5 billion won.
Compared with a year earlier, home prices in Gangnam still grew in July, rising about 5% — the slowest pace since the spring of 2021. It remains to be seen whether the downturn will last in the districts.
