Seoul's top 5% home prices surge 25% last year, second globally after Tokyo

Seoul's luxury housing market experienced a significant surge last year, with prices for the top 5% of homes increasing by 25.2% in the third quarter compared to the previous year. This sharp rise placed Seoul second globally among 46 major cities surveyed by the British real estate consultancy Knight Frank, trailing only Tokyo, which saw a 55.9% increase. The index, which tracks the price of the most expensive 5% of homes in major global cities, revealed that the average increase across these cities was a more modest 2.5% during the same period. The dramatic rise in Seoul's prime property values is largely attributed to rapid price escalations in exclusive neighborhoods, including the affluent Gangnam district and areas along the Han River, often referred to as the "Han River belt."

Over the past five years, Seoul's high-end housing prices have climbed 80.9%, ranking it fourth globally. It follows Dubai (224.3%), Tokyo (115.0%), and Manila (81.0%). This trend highlights a growing disparity within the city's real estate market. Lee Sun-hwa, a senior researcher at the Korea Institute for Future Studies, noted in a report on asset inequality that the gap between high-end properties and general housing prices is widening significantly in South Korea, particularly between Seoul's Gangnam and Han River areas and other regions, as well as between the Seoul metropolitan area and other provinces. She suggested that the recent sharp increase in top-tier housing prices is closely linked to the preference for owning a single, high-value property, often termed "똘똘한 한 채" (ttolttolhan han cha), which translates to a strong, well-located, and valuable single home.

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Our country's housing market shows extreme polarization between the Gangnam/Han River areas and other regions, and between the Seoul metropolitan area and other provinces, resulting in a large gap in price increases between high-end and general housing.

In contrast to the booming luxury market, South Korea's overall real housing price index, which adjusts for inflation, shows a more stable trend. According to the Organisation for Economic Co-operation and Development (OECD), South Korea's real housing price index rose by only 1.2 times between 2000 and 2024, falling below the OECD average of 1.6 times. Canada experienced the steepest increase among 24 surveyed countries, with its real housing prices rising 2.9 times during the same period. Australia, the United States, and the United Kingdom also saw substantial increases, ranging from 1.8 to 2.6 times.

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The recent sharp increase in Seoul's top 5% housing prices appears to be closely related to the preference for owning a single, high-value property.