"If It's the Same Regulation, Living in Seoul"... Geum, Gwan, Gu, No, Do, Gang Record-High Rally

Demand Concentrates in Mid-Low Priced Apartment Areas in Seoul After 6·17, Sales Prices Soar
Analysis Suggests Shift from Jeonse to Sales Demand Amid Rental Shortage
Meanwhile, Price Increase Slows as Investors Withdraw from Regulated Areas Like Cheongju

Jugong Apartment Complex 5, Sanggye-dong, Nowon-gu, Seoul

[Asia Economy Reporters Onyu Lim and Mune Won] Since the June 17 real estate measures, a reverse balloon effect has appeared mainly in the 'Geumgwan-gu (Geumcheon, Gwanak, Guro) and Nodogang (Nowon, Dobong, Gangbuk)' areas in Seoul, where mid-to-low priced apartments are concentrated. The government's real estate regulations have ironically become a momentum for rising prices of mid-tier apartments in Seoul. On the other hand, in some parts of the metropolitan area and provinces newly designated as regulated areas, such as Cheongju, the atmosphere has rapidly cooled as investors have withdrawn.

According to the weekly apartment trend report by the Korea Real Estate Board on the 26th, the price increase rates for sales in Geumcheon (0.04→0.07), Gwanak (0.05→0.06), Nowon (0.05→0.08), and Gangbuk (0.06→0.07) all rose compared to the previous week. Guro (0.11→0.11) and Dobong (0.05→0.05) also maintained the same rate of increase as the previous week but are rising steeply. These areas, collectively called 'Geumgwan-gu and Nodogang,' are densely populated with mid-to-low priced apartments under 900 million KRW.

The rising housing price trend is also evident in the recent continuous record-high transactions. In Gwanak-gu, on the 18th, an 83㎡ (exclusive area) unit in Yesung Grand Felice, Namhyeon-dong, was traded at 873 million KRW, setting a new record. An 84㎡ unit in Gwanak Park Prugio, Bongcheon-dong, was also traded at 845 million KRW on the 17th, breaking the previous record. A real estate agent in Bongcheon-dong said, "Although the actual transaction has not yet been registered, a few days ago it was traded at 850 million KRW," adding, "Prices are being called up to 930 million KRW."

In Guro-gu, on the 19th, a 59㎡ unit in Taeyoung Town, Guro-dong, was sold at the highest price ever of 848 million KRW. This is an increase of nearly 70 million KRW in just two months from 780 million KRW in April.

The June 17 measures reignited the housing prices in Geumgwan-gu and Nodogang, which had been taking a breather with falling or flat sales prices since last month. When areas in Gyeonggi Province such as Suwon, Anyang, Guri, Gunpo, Yongin Suji and Giheung, and parts of Incheon like Yeonsu, Namdong, and Seo-gu were designated as speculative overheating districts due to the balloon effect of the December 16 measures last year, demand concentrated in these well-located areas within Seoul, which are subject to the same regulations. This is a kind of reverse balloon effect.

Jang Jaehyun, head of Real Today, explained, "Since most of the metropolitan area was designated as a regulated area, some people decided to go to Seoul instead." Yoon Jihae, a researcher at Real Estate 114, also said, "The strengthened regulations in Gyeonggi-do and Incheon create an optical illusion of weakened regulations in Seoul," adding, "Among these, attention has shifted to mid-to-low priced apartments with relatively weaker loan restrictions, causing housing prices in Geumgwan-gu and Nodogang to continue rising."

There is also an analysis that real demanders who failed to find rental housing in Seoul have switched to purchasing in these areas. Kim Hakryeol, director of Smart Tube Real Estate Research Institute, said, "For rental housing to be available, either new apartments must be supplied or existing properties must be rented out, but both are blocked," adding, "People who could not find rentals in Mayongseong (Mapo, Yongsan, Seongdong) have turned to buying in Geumgwan-gu and Nodogang, where price differences are minimal."

On the other hand, the atmosphere in Cheongju, newly designated as a regulated area on the 17th, is rapidly freezing. Apartment prices in Cheongju rose by 0.46% this week, the lowest increase in the past seven weeks. Compared to the 1.08% increase just before the inclusion in the regulated area, it has dropped to about half. For example, an 80㎡ unit in Doosan We've Jeil City 2nd Phase, Bokdae-dong, Heungdeok-gu, considered a leading property in Cheongju, was traded at 599 million KRW on the 3rd, about 250 million KRW higher than a year ago, but recently has fallen back to the low 500 million KRW range. A real estate agent in Bokdae-dong said, "When prices were rising rapidly, owners were asking for prices in the low 600 million KRW range, but after the measures were announced, prices dropped by about 50 million KRW," adding, "Prices will fall further."

Given this situation, complaints are emerging in regulated areas such as Cheongju, Incheon, and Daejeon that housing prices are on a 'rollercoaster' due to the government's excessive regulations. The head of a real estate agency in Geomdan New Town, Incheon, said, "Although prices in some parts of Incheon have recently surged, it was limited to new developments in Songdo, Cheongna, and redevelopment in old downtown areas, while the rest were normalizing," adding, "Residents are baffled because the government designated these areas as speculative overheating districts without going through the adjustment district stage."

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