Prices of small apartments in Seoul's housing market are rising rapidly, showing notable strength. The trend reflects the convergence of a household structure increasingly centered on one- and two-person households with demand for a "smart single home" in prime locations, as tighter lending rules restrict financing and push buyers to downsize.
According to the Korea Real Estate Board on Tuesday, among this year's apartment sales price indexes by size, units with an exclusive area of 41-60 square meters posted the highest gain at 3.55%. They were followed by 61-85 square meters (2.34%), 103-135 square meters (1.58%), and units of 40 square meters or less (1.45%). Units of 86-102 square meters (0.82%) and those exceeding 136 square meters (0.91%) recorded relatively smaller gains.
This marks a clear shift from the previous year. In the same period a year earlier, units of 40 square meters or less were the only category to decline, at -0.11%, while 41-60 square meter units rose just 0.77%. In contrast, mid-to-large units led the gains, with homes exceeding 136 square meters up 2.23%, 86-102 square meters up 1.90%, 103-135 square meters up 1.51%, and 61-85 square meters up 1.34%. In just one year, market leadership has shifted to smaller units.
The transaction share of small apartments is also rising. As of Tuesday, of the 16,748 Seoul apartment transactions in the first quarter of this year, 7,368 involved small apartments with an exclusive area of 60 square meters or less, accounting for 44% of the total — nearly half. That is up 3 percentage points from 41% in the same period a year earlier. "The 59-square-meter type is what first-time homebuyers look for most," said the head of a real estate brokerage in Gangseo-gu, Seoul. "The size and price are appropriate for newlyweds or three-person households."
With the share of one- and two-person households in Seoul surpassing 66% in 2024, the lending regulations implemented last year are cited as a major factor behind the strength in small apartments. Under the real estate measures announced on October 15 last year, mortgage lending limits in the Seoul metropolitan area and regulated zones were reduced by home price tier, making it harder to purchase high-priced mid-to-large units. In addition, all of Seoul was designated as a land transaction permit zone, strengthening the requirement for owner-occupancy. As a result, demand has concentrated on smaller units that buyers can actually finance.
A growing number of small-area units are now breaking the 100 million won per 3.3 square meter (pyeong) threshold. According to the Ministry of Land, Infrastructure and Transport's real transaction price system, a 40-square-meter unit at Jayang Hoban Summit in Gwangjin-gu was sold for 1.29 billion won on the 6th of this month, becoming the first unit in the complex to surpass 100 million won per 3.3 square meters based on exclusive area.
Differences were also seen in the pace of recovery to previous peaks. A 59-square-meter unit at Samseon Prugio in Seongbuk-gu traded at 950 million won in February, setting a new record high, while 84- and 114-square-meter units have yet to recover their 2021 peak prices.
The price gap across size categories is also widening. An analysis of transactions over the past year at Helio City in Songpa-gu, broken down by unit size, showed that 49-square-meter units averaged 145.85 million won per 3.3 square meters — the highest. They were followed by 39-square-meter units (138.79 million won) and 59-square-meter units (137.99 million won), with small apartments sweeping the top ranks. The 84-square-meter units averaged 108.37 million won, about 37.47 million won (34.58%) lower than the 49-square-meter units. In 2024, the gap between 84-square-meter units (81.77 million won) and 49-square-meter units (104.43 million won) was about 22.67 million won (27.72%), meaning the gap has widened further.
Experts say demographic changes, along with policy and market variables, are driving the strength in small apartments. "Along with household fragmentation centered on one- and two-person households, lending regulations and price burdens are major factors behind the preference for small apartments," said Ham Young-jin, head of the real estate research lab at Woori Bank. "Before the lending regulations, buyers could purchase mid-to-large units by leveraging jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent), but now it is a rational choice to buy a small unit that allows owner-occupancy and is financially feasible." Jang So-hee, a real estate expert at Shinhan Premier Pathfinder, said, "Buyers who observed the sharp rise in home prices in 2021, the subsequent correction, and the pace of recovery have become more inclined to choose prime locations with low downside risk and high resilience. As the trend of choosing superior locations even at the cost of smaller size has strengthened, the popularity of a 'small but smart single home' has grown."
