Home Prices Actually Sink in Songpa! Let’s Buy Two

by Brendon Carr

A Korea Law Blog reader forwarded a story from the JoongAng Ilbo’s English edition about the super bargains coming available in the Songpa-gu area, one of the burgeoning eastern fringe regions of the Seocho-Kangnam-Songpa-Seongnam bulge belt preferred by affluent or striving residents of Seoul.

The headline has it “Home prices actually sink in Songpa”, but upon closer review we learn that the newly-constructed 33-pyong (1100 gross sq. ft.—remember, the yield is about 70% usable space) apartments in Songpa are a bargain at W800-900 million won, while the same size in Kangnam goes for W1.1 billion to W1.4 billion. So cheap, let’s buy two!

The top 10% richest urban households in Korea have an annual income of W107 million per year, according to a recent story in the Korea Times. So that tiny apartment in Songpa still costs the top 10% of wage earners about eight times their annual income—before money is wasted on things like taxes, or food.

We also learn that the average Korean household earns W44 million. Even if we use the metric eight years’ salary for the average family, that makes the average apartment price W350 million. What does that buy you in Seoul? A box down by the river.

Speaking of which, I highly recommend the Dr. Housing Bubble blog, focusing on the sagging Southern California real estate market. The Real Homes of Genius™ feature is sobering.

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