For any of you who might have wondered what in the world that 2012 hit pop song ‘Gangnam Style’ that just wouldn’t go away was all about, wonder no more: Turns out it was about the “Beverly Hills” equivalent in Seoul, South Korea, where luxury housing prices are now soaring.
Gangnam style, apparently, is the style of the uber-wealthy in one of South Korea’s prime neighborhoods.
One of Seoul’s richest districts, Gangnam, is the epitome of luxury and wealth, and the speculative flurry going on right now is enough to boost housing prices up further, catapulting Seoul to the top spot in Knight Frank’s Prime Global Cities Index in terms of luxury property price growth.
In the first quarter of 2018, Seoul overtook China’s Guangzhou and Cape Town on Frank Knight’s Prime Global Cities list, thanks to 24.7-percent annual growth.
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This, even at a time when the government is trying to cool things down in the housing market with “macro prudential measures, including new taxes for owners of multiple properties and tighter lending restrictions”, according to Knight Frank.
Government measures, for instance, have led to a nearly 50-percent hike in taxes for owners of apartments in the Gangnam area. Related: Tech Stocks Face Off For Hardware Dominance
And the government is experiencing a tax windfall. In this first two months of this quarter, the South Korean government collected more taxes than it did in all of 2017 because property owners went on a massive selling spree to offload property before tougher capital gains taxes went into effect at the start of April, according to Korean media.
But nothing, it would seem, can stop Gangnam’s surge forward, and speculative activity keeps getting stronger.
Luxury prices in Seoul rose nearly 25 percent in the first quarter of this year, compared to the same period last year. For means of comparison, number two on Knight Frank’s rankings, Cape Town, saw luxury housing price growth of 19.3 percent during that time period.
China’s Guangzhou—which was in first place last year—fell to number three, with growth at about 16 percent for the first quarter.
Overall, however, global high-end housing markets have been cooling down over the past year, with 43 prime cities seeing a slow-down in pricing growth in the first quarter, with worldwide prices growing an average of 4.8 percent.
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And those cities that are traditional the main hubs for prime luxury real estate saw less impressive growth. Among them, New York, which saw a meager 1-percent rise in luxury housing prices in the first quarter. London fared even worse, with a 1.1-percent fall in prices. Stockholm, Sweden saw luxury housing prices fall 8.4 percent.
The musician behind the famous pop song, Psy, says his intention was to pay tribute to the ladies of Gangnam, who are now basking in their new top-lister ranking:
“I describe it as noble at the daytime and going crazy at the night time. I compare ladies to the territory. So — noble at the daytime, going crazy at the night time — and the lyric says I am the right guy for the lady who is like that.”
By Tom Kool for Safehaven.com
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