Seoul's cheapest apartments climb five times faster than its priciest under mortgage caps

Very little of the decline came from expensive flats getting cheaper. KB's ratio divides the average price of the top 20% of flats by that of the bottom 20% ^[3]. Multiply January's ratio by that month's bottom-fifth average of 500.84 million won ^[5] and the top fifth's January average comes out near 3.466 billion won ^[1]. September's top-fifth average was 3.47456 billion ^[7], a rise of about 0.25% in eight months ^[2]. Hold the top completely flat, divide 6.92 by the bottom fifth's 10.39% gain ^[5], and the ratio lands at 6.27 ^[3], a hundredth from the published 6.28 ^[1].

In won, the gap widened last month. The bottom fifth's average rose 11.54 million won ^[4] and the top fifth's rose 14.58 million ^[5], so the distance between them grew by about 3 million won, to roughly 2.92 billion ^[6]. The ratio fell anyway, because 11.54 million is 2.13% of a 541 million won base ^[4] while 14.58 million is 0.42% of a 3.46 billion one ^[7].

Analysts cited by Seoul Economic Daily put the pattern down to lending rules: buyers with thinner finances have moved to mid- and low-priced flats, where they can borrow more ^[9]. The largest cap sits on the cheapest homes. At the bottom fifth's average of 552.92 million won ^[4], the 600 million won ceiling is about 47 million won above the price itself ^[9]. "Demand appears to be concentrating on mid- and low-priced apartments where buyers can borrow slightly more, and that is pushing prices up," an industry official said ^[10].

The split holds by size. Flats of 60 square meters or less rose 1.60% in September, and units above 135 square meters rose 0.21% ^[15]. In Seongbuk, a 59-square-meter unit at Jeongneung Pungrim Iwon sold for 598 million won last month, 83 million won above its March record ^[11], or about 16% in six months ^[12]. In effect, the cap schedule steers borrowed money toward the cheapest fifth of Seoul's stock, the part that non-homeowners buying to live in compete for, and away from the top, where the cap is smallest ^[8][9][16].

The September data fit the cap explanation, though other outcomes would change the read. If the top fifth starts to fall, the ratio keeps narrowing for a reason that makes entry easier. If the bottom fifth stalls with the top unchanged, the ratio stops moving and the pressure on buyers trying to get in stops growing. I think the cap reading is right for now, given how little the top has moved since January ^[2]. It would be wrong if a month came in with the top-fifth average below August's 3.45998 billion won ^[7] and a flat bottom fifth.