- Approximately 3.7 trillion won flowed out of South Korea's capital market in the first four months, directly into the residential market, leading to a significant revaluation of assets in core areas.
- A structural gap appeared on the supply side, with nationwide construction completions in South Korea decreasing by 45% year-on-year in the first quarter, and completions in Seoul's core areas shrinking by nearly 30% simultaneously.
- The trend of deleveraging among high-net-worth individuals is evident, with the proportion of all-cash property purchases in Seoul's core areas reaching a historic high, and the younger generation becoming the main force in this round of buying.
Significant Revaluation of Core Area Assets
According to the latest statistics released by the South Korean Ministry of Land, Infrastructure and Transport, in the first four months of this year, a large amount of liquidity originally allocated to the stock and bond markets shifted, with about 3.7 trillion won flowing into the residential market. Seoul became the main recipient of these funds, absorbing approximately 2.44 trillion won, particularly concentrated in traditional luxury residential areas such as Gangnam, Songpa, and Seocho districts. This shift in capital flow directly led to a rapid increase in asset prices in core areas, with Seoul's residential prices in April rising by 9.56% year-on-year. In the three Gangnam districts and specific popular areas known as MaRong City, the average price increase expanded to 15.7%, with some popular residential assets appreciating by about 200 million won within a year.
Supply-Demand Imbalance and Cost Pressure Drive Asset Prices
In addition to the capital-driven factors, a significant reduction on the supply side is the main reason for this asset price change. Due to the continuous rise in international construction material prices, labor shortages, and the increasing risk of debt defaults among construction companies, South Korea's nationwide construction completions in the first quarter fell sharply by 45% year-on-year, and Seoul's construction completions also decreased by nearly 30%. This structural gap on the supply side, combined with strong cash buying in the market, created a stark supply-demand mismatch, further enhancing the inflation-resistant properties and premium space of real estate in core areas.
All-Cash Transaction Ratio Reaches Historic High
In this round of capital flow adjustments, the asset allocation strategies of high-net-worth individuals showed clear characteristics of deleveraging and de-financialization. In the April residential transaction records of Seoul's three Gangnam districts, the proportion of purchases made entirely with self-owned cash and stock investment returns, without relying on bank loans, rose to 41.2%. From 2020 to 2025, the proportion of all-cash purchases in high-priced residences exceeding 1.5 billion won remained below 5%, but in April this year, it surged to 13.2%, setting a historic high. Meanwhile, the younger generation, around 30 years old, became the main force in this round of purchases, with the scale of home-buying funds reaching 1.2592 trillion won in the first four months, accounting for over 40% of first-time homebuyers in Seoul.
