Daejeon, Sejong, and the Seoul Metropolitan Area Led House Price Increases This Year

[Asia Economy Reporter Onyu Lim] An analysis revealed that Daejeon, Sejong, and the metropolitan area led the nationwide apartment market in the first half of this year.

Real Estate 114 announced on the 25th that the nationwide apartment sale prices rose by an average of 2.85% in the first half of the year, showing a somewhat slower increase compared to the second half of last year (3.88%). This was due to the impact of the 12·16 measures, which included strengthened regulations on speculative loan demand, increased comprehensive real estate tax rates, and expansion of the price ceiling system for pre-sale apartments, as well as the effects of the novel coronavirus disease (COVID-19), which dampened the real estate market.

By region, apartment prices recorded the largest increase in Daejeon (5.83%), followed by Sejong (5.50%), Incheon (5.07%), Gyeonggi (4.76%), Seoul (2.11%), Busan (1.97%), Chungnam (1.29%), and Ulsan (1.07%).

In Daejeon, the influx of investment demand continued to drive apartment price increases, leading to its designation as a regulated area (entire Daejeon) and a speculative overheating district (Dong, Jung, Seo, and Yuseong districts) under the government's June 17 real estate measures. Sejong City saw a large increase due to continuous population inflow and improvements in transportation infrastructure.

Additionally, Busan's upward trend continued thanks to a strong subscription market, while Chungnam's price increases were led by Gyeryong City, where IKEA is scheduled to open, and Cheonan and Asan, which benefited from the spillover effects of Sejong City as non-regulated areas.

With the regional economy gradually improving and the supply burden of new complexes easing, Ulsan also experienced an upward trend. In the metropolitan area, buying demand centered on low-priced apartments continued following announcements of transportation development projects such as the extension of Line 7 and the Great Train Express (GTX).

In Gyeonggi Province, prices rose mainly in the southern region. Among them, the so-called Suyongseong (Suwon, Yongin, Seongnam) led the price increases. In particular, Suwon's apartment prices rose by 10.67% in the first half of this year, marking the largest increase in Gyeonggi Province.

In Seoul, price increases were led by the outer areas. While the rise in apartment prices in the Gangnam area slowed significantly due to loan regulations, buying demand continued for mid- to low-priced apartments under 900 million won, leading to significant increases in Seoul areas such as Nowon (7.15%), Gangbuk (6.57%), and Seongbuk (5.99%).

Meanwhile, nationwide apartment jeonse (long-term lease) prices rose by 1.60% in the first half of this year. By region, the largest increases were seen in Sejong (4.89%), Daejeon (3.62%), Gyeonggi (2.13%), Seoul (1.87%), Ulsan (1.31%), and Incheon (1.09%).

Sejong City recorded the highest jeonse price increase nationwide due to continued population inflow and a decrease in new apartment supply. The average number of new apartment move-ins in Sejong over the past five years was about 13,000 units annually, but this year it dropped to 5,600 units, less than half. In Daejeon, redevelopment and reconstruction urban renewal projects generated relocation demand, which contributed to the rise in jeonse prices.

In Ulsan, both sale and jeonse prices rose due to a decrease in new apartment supply. While 12,627 units moved in last year, only 3,010 units, a reduction of over 70%, are expected this year.

Jeonse prices in the metropolitan area, which had been relatively stable, are experiencing intensified shortages of jeonse listings due to increased subscription waiting demand expecting lower pre-sale prices ahead of the private land price ceiling system and the conversion to monthly rent due to low interest rates. As localized shortages continue, jeonse price increases in Seoul, Gyeonggi, and Incheon have somewhat expanded compared to the second half of last year.

On the other hand, Jeju was the only metropolitan city to see jeonse prices fall compared to the second half of last year, due to economic recession, decreased housing demand, and inventory accumulation.

Real Estate 114 analyzed, "The nationwide apartment market in the first half saw a slowdown in the upward trend due to the 12·16 measures and the impact of COVID-19," but added, "With abundant liquidity, a balloon effect continued in the outskirts of the metropolitan area, and in the provinces, Daejeon and Sejong stirred up the market, causing the previously stable housing prices to rise again this month."

It further forecasted, "In the second half, the real estate market is expected to see a short-term cooling of overheating in the metropolitan area and some provincial regions newly designated as regulated areas under the recent June 17 measures, and the transaction market will likely remain subdued."

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