Seoul Housing Prices Pause Decline... Gyeonggi-do Sees Spread of 'Balloon Effect'

12·16 Measures, 2·20 Measures 'Side Effects' Clear
Some Stability in Gangnam Area but Balloon Effect Spreads
Seoul 4 Weeks Consecutive 0.01%+ Rise, Decline Pauses
Moon "If Any Speculation Signs, Firm Action Will Be Taken"

(Photo by Yonhap News)

[Asia Economy Reporter Moon Jiwon] Although the upward trend in housing prices has slowed down mainly in the Gangnam area since the announcement of the December 16 real estate measures last year, Seoul apartment prices have risen by 0.1% for four consecutive weeks, showing a stubborn pattern that refuses to subside. This has led to analyses suggesting that the effectiveness of the regulations may have reached its limit. In this situation, there are also concerns that after the February 20 real estate measures, the 'balloon effect' is spreading to areas such as Incheon and Daejeon, making additional regulations inevitable.

According to the Korea Real Estate Board's "Weekly Apartment Price Trend for the Fourth Week of February (as of the 24th)" on the 29th, apartment prices in the metropolitan area rose by 0.3%, an increase from the previous week's 0.27%. Seoul, the main target of the December 16 measures, saw prices rise by 0.1% for four consecutive weeks, indicating a pause in the slowdown of the price increase. Meanwhile, prices in Incheon and Gyeonggi Province rose more sharply, naturally pushing up housing prices in the metropolitan area.

In Seoul, although the Gangnam 3 districts (Gangnam, Seocho, and Songpa) have seen prices fall for six consecutive weeks, the decline is still minimal compared to the rapid surge at the end of last year. In fact, some major complexes in Jamsil have seen prices rise again after some urgent sales transactions. For example, the 84㎡ unit at Jamsil Els in Songpa-gu was traded at 2.17 billion KRW in December last year, dropped to the mid-1.9 billion KRW range after the measures were announced, but recently the asking price has risen to between 2.0 and 2.1 billion KRW.

It is also problematic that apart from the Gangnam 3 districts and Yangcheon-gu, there is no clear downward trend in prices. Until last week, areas such as Jongno-gu, Yongsan-gu, Gwangjin-gu, and Gangdong-gu showed slight increases of 0 to 0.02%, leading to expectations that prices would soon turn downward. However, this week most of these areas either saw a slight increase or maintained a stable trend.

Notably, areas like Nowon, Dobong, Gangbuk-gu (collectively known as No-Do-Gang) and Guro-gu continue to show relatively high increases of 0.08 to 0.09%. The Korea Real Estate Board analyzed that "the price increases continue mainly in complexes with small increases or those with development prospects."

In this context, the 'balloon effect' is spreading to Incheon, Daejeon, and Sejong following the targeted regulations ('pinpoint regulations') on Suwon, Anyang, and Uiwang areas under the February 20 measures. In particular, Sejong has shown a significant increase of 1.41% and 1.52% over the past two weeks, raising concerns that it has entered an abnormally overheated phase. Nearby Daejeon also saw housing prices rise from 0.17% to 0.31%, then 0.53%, and 0.75% this month.

President Moon Jae-in is receiving a briefing on the work of the Ministry of Land, Infrastructure and Transport and the Ministry of Oceans and Fisheries at the Blue House on the 27th. (Photo by Yonhap News)

The signs of overheating in Incheon, where apartment prices have been rising for 28 consecutive weeks since August last year, are also considerable. Although the increase rate (0.40%) is not as high as in Sejong or Daejeon, prices have recently surged due to speculative forces moving in to avoid the 'pinpoint regulations' applied in areas like Suwon. Areas such as Yeonsu-gu (1.06%) are expected to see further price increases due to many positive factors like the construction of the GTX B line (Great Train Express) in the metropolitan area. For example, a 85㎡ unit at Songdo The Sharp Central City in Songdo-dong, Yeonsu-gu was recently traded at 479 million KRW, but the current asking price has risen to 550 million KRW.

Additionally, apartment prices in regulated areas such as Suji-gu in Yongin (1.04%) and Jangan-gu in Suwon (1.36%), as well as in non-regulated areas like Hwaseong (1.07%) and Osan (0.18%), have also shown relatively high increases. Industry insiders suggest that since the side effects of the December 16 and February 20 measures are evident, additional regulations are inevitable. While the dominant view is that the timing of new regulations will be after the April general elections, there is also speculation that it could be brought forward.

President Moon Jae-in also urged on the 27th during a briefing from the Ministry of Land, Infrastructure and Transport, saying, "We should not hesitate just because elections are approaching," and requested, "If there are signs of speculation anywhere, please take firm measures."

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