When Clicking on Gangnam Area Complexes, Mid-to-Low Priced Reconstruction in Seoul Surges

Clicking on Gangnam Area Reconstruction Boosts Outer Area Rebuilding
Initial Complex Prices in Sinwol, Bulgwang, Pungnap Rise by Tens of Millions
Expectations Grow and Buying Demand Steady After Preliminary Safety Inspection Pass
Long Project Period and Many Variables Require Cautious Investment

[Asia Economy Reporter Moon Jiwon] Since the announcement of the December 16 real estate measures, while there has been a surge in quick-sale listings in reconstruction complexes in the Gangnam area of Seoul, prices of mid-to-low priced reconstruction apartments in the outskirts have risen significantly. Most of these are houses priced under 900 million KRW, which are largely exempt from the government's tightened loan regulations, and with positive factors such as passing safety inspections, the buying sentiment among demanders is being stimulated.

According to frontline real estate agencies on the 10th, a 59㎡ unit (exclusive area) in Sinwol Sijeong Apartment in Sinwol-dong, Yangcheon-gu, Seoul, was listed for sale at 630 million KRW on the 8th. This is about 60 million KRW higher than the asking price at the beginning of this month, and nearly 100 million KRW higher than the actual transaction price of 534 million KRW in December last year.

The reason for the sharp rise in asking prices is the expectation that the reconstruction project may gain momentum. Sinwol Sijeong, completed in 1988, passed the preliminary safety inspection for reconstruction in December last year and is currently raising funds to apply for a detailed safety inspection. Although still in the early stages of the project, nearby real estate agencies believe that the passing of the first detailed safety inspection by Mokdong New Town Complex 6 and Seongsan Sijeong in Seongsan-dong, Mapo-gu, has influenced the price increase.

A representative from real estate agency A in the area said, "The reconstruction atmosphere in nearby Mokdong New Town seems to have influenced Sinwol Sijeong as well," adding, "There is steady buying demand, but a shortage of listings." Currently, there are no listings for 43㎡ and 50㎡ units in Sinwol Sijeong, and listings for 59㎡ units are also scarce. A representative from nearby real estate agency B predicted, "Although transactions may not be concluded immediately at the increased asking prices, once low-priced listings disappear, actual transaction prices will also rise."

Misung Apartment in Bulgwang-dong, Eunpyeong-gu, which passed the first detailed safety inspection in November last year, is also showing a noticeable price increase. A 125㎡ unit in this apartment was listed for 830 million KRW the day before. Considering that it was mainly traded in the high 700 million KRW range until the end of last year and the recent asking prices were around 780 million to 800 million KRW, this represents an increase of about 30 million KRW. An 84㎡ unit in this apartment was also listed on the 8th for 730 million KRW, about 50 million KRW higher than the actual transaction price in November last year. A representative from nearby real estate agency C said, "Prices have risen significantly since the second half of last year," adding, "The passing of the detailed safety inspection by Seongsan Sijeong seems to be influencing this apartment as well."

Reconstruction projects in the peripheral areas of Gangnam are also joining the price increase trend. In the case of Misung Apartment in Pungnap-dong, Songpa-gu, the expectation of reconstruction has caused small and medium-sized units to disappear from the market, while asking prices for medium and large units have risen by nearly 100 million KRW. Currently, the market price for a 116㎡ unit in this apartment is between 1.05 billion and 1.15 billion KRW, nearly 100 million KRW higher than in December last year. Pungnap Misung passed the preliminary safety inspection in October last year.

The industry analyzes that the lower prices compared to Gangnam reconstruction complexes are driving the price increase in reconstruction projects in the outskirts. This contrasts with the trend of quick-sale listings in high-priced Gangnam reconstruction complexes such as Jugong Complex 1 in Banpo-dong, Seocho-gu, and Jugong Complex 5 in Jamsil-dong, Songpa-gu, which have dropped by several hundred million KRW compared to the end of last year. For houses priced over 1.5 billion KRW, mortgage loans are completely prohibited, but houses under 900 million KRW are exempt from regulations and can still receive loans up to 40% of the house price, attracting interest from both actual buyers and investors.

However, some caution that for reconstruction complexes in the early stages of preliminary safety inspection, the project period is long and unexpected variables may arise during the process of detailed safety inspection and approval of the association establishment, so investment should be approached carefully. A representative from real estate agency D in Pungnap-dong said, "Even for Pungnap Misung, upgrading the zoning is not easy, so the project feasibility is not high," adding, "A conservative approach is necessary."

This content was produced with the assistance of AI translation services.