The average transaction price of so-called "mini apartments" in Seoul — units of 40 square meters or less — climbed nearly 16% over the past year. As renters squeezed by rising lease costs and tighter mortgage rules turn to smaller homes, sales in the 800 million to 900 million won range are mounting even outside the affluent Gangnam area. For buyers willing to accept less space to secure a home in Seoul, the threshold for homeownership is rising further.
An analysis of Ministry of Land, Infrastructure and Transport transaction data by The Seoul Economic Daily on the 21st showed that apartments of 40 square meters or less in Seoul sold for an average of 459.89 million won in the first nine months of this year, up 62.97 million won, or 15.9%, from 396.92 million won a year earlier. Transactions rose 21.6% to 4,985 from 4,101. Sales of 1 billion won or more surged 41.5% to 375 from 265.
Prices are climbing in Seoul's outer districts as well. A 39-square-meter unit at Hongje Station Harrington Place in Hongje-dong, Seodaemun District, sold for 975 million won in July. A 39-square-meter unit at Gayang Complex 6 in Gayang-dong, Gangseo District, fetched 950 million won in August, and a 33-square-meter unit at Misung in Wolgye-dong, Nowon District, sold for 820 million won the same month.
Analysts attribute the rise in small-unit transactions to a combination of heavier lease costs and reduced purchasing power under mortgage restrictions. With both jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent) deposits and monthly rents rising, more tenants are shifting to purchases, and buyers with limited financing are opting for relatively cheaper small apartments — a trend expected to persist for some time.
Behind the surge in prices for apartments of 40 square meters or less is what analysts call "survival buying" — purchases driven by a shortage of rental listings and climbing rents that push households to secure a home, however small. As high prices and loan curbs lead more owner-occupier buyers to trim their living space, transaction prices for the smallest units have risen so sharply that deals above 2 billion won are now common in the Gangnam area.
An analysis of ministry transaction data by The Seoul Economic Daily on the same day showed the highest price for a Seoul apartment of 40 square meters or less in the first nine months of this year came at Helio City in Garak-dong, Songpa District, where a 39-square-meter unit sold for 2.1 billion won in July. At Riscents in Jamsil-dong, Songpa District, a smaller 27-square-meter unit sold for 1.95 billion won in September — a home of roughly 8.4 pyeong trading near the 2 billion won mark. In Gangnam and Seocho districts, units in the 30-square-meter range changed hands for 1.7 billion to 1.9 billion won.
High-priced deals are not confined to the three Gangnam-area districts. A 35-square-meter unit at Trimage in Seongsu-dong, Seongdong District, sold for 2.07 billion won in January, and a 39-square-meter unit at Olympic Park Foreon in Dunchon-dong, Gangdong District, went for 1.81 billion won in May. In Jongno and Seodaemun districts, units in the 30-square-meter range sold for 900 million to 1 billion won, showing that high-priced deals for the smallest apartments are emerging across the capital.
Aging complexes, not just new ones, are also commanding high prices. A 39-square-meter unit at Gangbyeon in Gayang-dong, Gangseo District, completed in 1992, sold for 920 million won last month. "Even though it's 34 years old, it's near a Line 9 station and there are hopes for rebuilding, so it has risen nearly 300 million won in the past year," an official at a nearby brokerage said. "These days people clearly value location over floor space."
The shift in buying demand toward the smallest units stems from mounting lease costs. According to the Korea Real Estate Board's monthly rent price index by unit size, the index for Seoul apartments of 40 square meters or less rose 8.19% to 103.19 in September from 95.38 in December last year. In the northeastern region, which includes Nowon, Dobong, Gangbuk and Seongbuk districts, the index jumped 11.04% to 104.62 from 94.22 over the same period — outpacing both the citywide gain and the 7.31% rise in the southeastern region, which includes Gangnam, Seocho, Songpa and Gangdong districts. With mortgage rules also limiting purchasing power, the smallest apartments are emerging as an alternative because of their lower total purchase price.
Prices for the small apartments buyers choose to cut housing costs are instead rising faster. Seoul apartments of 20 square meters or less sold for an average of 230.63 million won in the first nine months of this year, up 29.7% from 177.82 million won a year earlier. Units above 20 and up to 30 square meters rose 10.6% to 431 million won from 389.6 million won, while those above 30 and up to 40 square meters gained 10.9% to 591.98 million won from 533.8 million won. The increase for units of 20 square meters or less was nearly triple that of the other size brackets, the steepest of any category.
Cheaper small apartments are also becoming harder to find. The share of transactions below 300 million won fell 8.4 percentage points to 33.3% from 41.7% a year earlier. The median transaction price rose 37 million won, or 11.3%, to 365 million won from 328 million won. Low-priced deals accounted for a smaller share, while overall transaction prices moved higher.
The concern is that as prices for even the smallest apartments climb, their role as a cheaper housing option is weakening. Tenants who turn to buying to escape rising lease costs now face higher prices and must also cut their living space. The more that demand for relatively affordable homes concentrates in the smallest units, the narrower the options become for buyers with limited funds.
"As jeonse and monthly rents rise, purchase demand increases, but loans are hard to obtain for larger, more expensive homes, so demand naturally concentrates in the smallest apartments," said Shin Bo-yeon, a professor of real estate AI at Sejong University. "Prices keep rising because of demand from people who cut both the price and the floor space to improve access to work and enjoy the infrastructure of central Seoul." She added that "demand for small units in large branded complexes near subway stations is expected to continue going forward."