Seoul Apartment Prices Show Recovery Signs - "Second Half Upward Pressure Materializing"

Recovery signals are being detected in Seoul's apartment market entering August 2025. The pattern of "first half weakness, second half strength" predicted by experts is materializing, as supply shortage concerns and expectations of interest rate cuts work in combination to revitalize the sales market.

According to the Korea Construction Industry Research Institute's 2025 real estate outlook, metropolitan apartment sales prices are predicted to rise approximately 1.0% annually. This signifies a transition from market recession that continued from the second half of last year to gradual recovery.

Particularly in preferred areas centered on Gangnam's big three districts (Gangnam, Seocho, Songpa), buyer sentiment has significantly improved. According to the real estate industry, inquiries for large apartment complexes in the Gangnam area surged from late July to early August, with actual transactions also increasing.

Supply Shortage Materializes - Concerns of 'Supply Cliff' in Second Half 2025

The main cause of apartment price upward pressure is supply shortage phenomena. Cumulative apartment permits by September 2024 decreased 21% compared to the previous year, while non-apartment permits decreased 34%. Considering the time lag between groundbreaking and completion, there's a high possibility of facing a full-scale 'supply cliff' from the second half of this year.

A Korea Real Estate Board official stated, "The impact of sharply reduced new project development during the 2022-2023 recession will begin to appear in earnest from the second half of 2025," and "supply shortage-induced price upward pressure will become more pronounced in the metropolitan area."

Indeed, supply-demand imbalance is intensifying as schedules for major pre-sale complexes in Seoul are being delayed or reduced. The industry views that "if the current supply shortage situation continues, Seoul apartment prices could potentially rise 5-10% by the end of 2025."

Interest Rate Cut Expectations vs Political Uncertainty Tug-of-War

Another driving force behind real estate market recovery is expectations of interest rate cuts. With the U.S. Federal Reserve continuing base rate cuts, the possibility of additional domestic base rate cuts is increasing. This is expected to lower housing purchase funding costs, leading to increased demand.

A Bank of Korea official stated, "Considering the global interest rate cut trend and the need for domestic economic recovery comprehensively, there is room for additional base rate cuts within the year," adding "this will have a positive impact on the real estate market."

However, political uncertainty is acting as a variable. Presidential impeachment proceedings and real estate policy controversies in political circles are having negative impacts on market sentiment, raising concerns about the sustainability of the recovery trend.

Real estate experts analyze that "with factors for housing price increases and decreases in tight competition, added political uncertainty makes market predictions difficult," and "volatility is expected to be high in the short term."

Meanwhile, regional polarization phenomena are intensifying further. Price gaps between metropolitan and provincial areas, Gangnam and non-Gangnam areas, and large and small complexes are expanding, making the 'real estate two-track' phenomenon more pronounced. Experts advise that "this is a time requiring careful analysis of individual regional and complex characteristics."

According to KB Real Estate's latest report, Seoul's apartment market has shown increasing transaction volumes from mid-August, with recovery particularly pronounced in high-priced apartments above 30 million won per 3.3 square meters. This suggests that improved buyer sentiment centered on high-income groups is having positive impacts on the overall market.

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Original Article (Korean): Read in Korean