The growth of housing prices in Seoul has slowed down for two straight weeks after the South Korean government hinted on imposing tougher rules on redevelopment projects last month in an effort to curb rapidly rising apartment prices particularly in the capital city’ affluent Gangnam area.

According to Korea Appraisal Board, apartment prices in Seoul as of Monday rose 0.31 percent from a week ago, slowing down from the 0.38 percent growth last week. The slowing price increase was more noticeable for apartments in the Gangnam area referring to three districts in southern Seoul where the property market has been overheated amid high expectations that prices would go up as there are a number of scheduled redevelopment projects that tend to increase home value.

Apartment prices in Gangnam District, one of the three upscale districts in southern Seoul, rose 0.31 percent as of Monday from a week ago, slowing down from a 0.93 percent weekly growth last week. Housing price growth in Seocho District also slowed down from 0.78 percent to 0.69 percent and Songpa District from 0.67 percent to 0.54 percent over the same period.

The slight dip in apartment price growth in Seoul’s Gangnam area comes after the government has hinted at introducing tougher rules on redevelopment projects by forcing home owners to return a certain amount of gains from increased value of their apartments from redevelopment to the government. It also hinted at introducing new regulations that would make harder for old apartments to receive green light for redevelopment, which mainly focuses on building new apartments after demolishing old buildings on the same land. Redevelopment of apartments often increase housing value, becoming a major attributing factor to the overall housing market boom in Korea as it encourages many investors to buy homes.

Meanwhile, with signs that the government is pushing to curb redevelopment, investment demand has been shifted from Gangnam area to other prospective redevelopment areas and new apartments such as in new towns, leading to an increase in overall housing prices.

Apartment price in Yongsan District in central Seoul increased 0.83 percent on week this week, accelerating from last week’s 0.31 percent growth and Mapo District in northwestern Seoul 0.49 percent versus 0.39 percent over the same period.

In Gyeonggi Province, apartment prices in Gwacheon increased 1.40 percent this week, up from 0.59 percent a week ago, appreciating at a higher rate than 0.07 percent for the rest of the area. Prices also jumped from 0.78 percent last week to 1.33 percent this week for apartments in Bundang District in Seongnam.

By Chu Dong-hun and Lee Eun-joo

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]