Price-Tier Adjustment and Spatial Concentration in Seoul’s Apartment Market During a Period of Interest Rate Changes

This study examines how Seoul’s apartment market adjusted across price tiers and spatial dimensions during a period of interest rate changes from 2020 to 2025. Using apartment transaction microdata from the Ministry of Land, Infrastructure, and Transport (MOLIT) and monthly interest rate data from the Bank of Korea’s Economic Statistics System database, the study analyzes changes in transaction volume, transaction counts across price tiers, and spatial concentration. To capture more directly how financing costs are transmitted to transaction behavior, the analysis compares the policy rate with household loan and mortgage rates. The empirical results show three main findings. First, overall transaction volume declined significantly. This contraction was captured more clearly by household loans and mortgage rates than by the policy rate, suggesting that actual financing costs were more closely associated with the decline in transactions than the policy signal itself. Second, the decline was not confined to a specific segment but was observed across the lower 50%, middle 40%, and upper 10% price tiers in absolute transaction counts, indicating a broad-based, market-wide contraction rather than a segment-specific adjustment. Third, the spatial concentration measures do not provide consistent evidence of increasing concentration, as results vary across interest rate specifications and are not statistically stable. This finding suggests that the transaction contraction reflected a broadly distributed decline across Seoul rather than a selective retreat to preferred locations. Overall, the findings suggest that the adjustment in Seoul’s apartment market during periods of changing interest rates should be understood not only as a decline in total transactions but also as a broad-based contraction across price tiers, without selective spatial concentration, under changing financing conditions.