CSAT feared to inflate bubble in Gangnam

The government’s move to expand the portion of the College Scholastic Ability Test (CSAT) in college admission is raising concerns that it could further inflate a bubble in housing prices in the affluent Gangnam area.

Seoul’s apartment prices are considered to have already been overheated due to a mixture of record interest rates and a lack of supply in the affluent area caused by government regulations to curb speculation on the reconstruction of old apartments there.

“The Gangnam area is the home of Korean private education, with a number of prestigious high schools there. This is one of the reasons behind its expensive home prices compared to other areas,” said a Tower Ewha real estate agency broker surnamed Lee.

“Apartment prices here have already been quite high since the Bank of Korea lowered its key rate earlier this month. And President Moon Jae-in’s recent announcement regarding the CSAT just added fuel to the fire.”

Students here start preparing for the CSAT at a very young age. The test can be taken only once a year, and many high school seniors decide to postpone their admissions and study for another year if their scores are not high enough for acceptance into the country’s top universities.

For this reason, students from wealthier families with better private education opportunities are believed to have a greater advantage in the CSATs.

According to a study released by the National Council of Governors of Education, about 24.5 percent of students who entered Seoul National University between 2016 and 2018 lived in the affluent Gangnam, Seocho, Songpa and Yangcheon districts of Seoul.

The government’s sudden move to expand the CSAT was attributed to the scandal surrounding former Justice Minister Cho Kuk involving his daughter who was alleged to have received illicit education opportunities.

The advantages Cho’s daughter enjoyed allegedly on the back of Cho’s connections and social status has rekindled a debate in Korea over the fairness of the current college admissions system, leading President Moon Jae-in to announce the government’s plan to expand the standardized admission system.

Home prices in Gangnam started soaring shortly after Moon’s Oct. 22 announcement.

According to the real estate agency, an 88 square meter Raemian Daechi

Palace apartment was put up for sale for 2.9 billion won ($2.48 million) last weekend, up about 100 million won from the previous weekend.

“Education is one of the leading factors behind Seoul’s apartment prices,” said NH NongHyup Bank mortgage division worker Roh Joon.

“This could create another bubble in Seoul’s home prices. The government should approach the issue more carefully.”

“Education is one of the leading factors behind soaring apartment prices.”