Government Real Estate Regulation Tightening Causes 'Balloon Effect' in Non-Regulated Areas

[Asia Economy Reporter Choi Dong-hyun] While Seoul housing prices have stalled following the government's successive real estate policy announcements, a balloon effect is emerging in the metropolitan area and non-regulated regions in the provinces.

According to the weekly apartment price trends from the Korea Real Estate Board on the 13th, as of June 31, Seoul apartment sale prices rose by 0.01%, maintaining the same level as the previous week (0.01%). Since recording 0.11% in the first week of July, the rate of increase has continuously slowed. This is interpreted as a result of demand slowing due to various regulatory measures announced by the government. The Ministry of Land, Infrastructure and Transport previously announced the June 17 measures, which included expanding speculative overheated zones and adjustment target areas and preventing gap investments. Most of the metropolitan area, except for some parts, was included in the regulated areas under these measures. Additionally, through the July 10 measures, the government announced plans to apply a maximum comprehensive real estate tax rate of 6% for multi-homeowners and raise acquisition tax up to 12%.

On the other hand, sale prices in non-regulated areas are showing a clear upward trend. It is analyzed that housing demand is concentrating in places where strengthened regulations and tax burdens can be avoided. This is because loan regulations are less strict, making it relatively easier to secure funds, and the resale restriction period for pre-sale rights is short, allowing for capital gains realization.

According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system, the 59㎡ (exclusive area) apartment in ‘Garam Village 7th Complex Hanra Vivaldi’ located in Unjeong New Town, Paju, Gyeonggi Province, was traded at 260 million KRW in February and rose about 19% to 310 million KRW in July. Also, the 72㎡ unit in ‘Gimpo Hangang E-Land Town Hills’ in Hangang New Town, Gimpo, increased from 360 million KRW in January to 420 million KRW in July this year. Paju and Gimpo are non-regulated areas in the metropolitan region where housing demand has recently surged, which is analyzed as the main cause of the price increase.

In the provinces, Cheonan in Chungnam is attracting attention. The 84㎡ unit in ‘Cheonan Buldang Jiwel The Sharp’ located in Buldang-dong, Cheonan-si, Chungnam, was traded at 820 million KRW in July this year. This is about 10% higher than the real transaction price of 745 million KRW at the end of December last year. Following this, the 84㎡ unit in ‘e-Pyeonhansesang Dujung 3rd Phase’ located in Dujung-dong, Cheonan-si, found a new owner at 372 million KRW in July this year. This is about a 20% increase compared to January this year (310 million KRW). It is interpreted that the freedom from government regulations and the nearby Sejong City administrative capital relocation issue influenced this.

In this situation, interest in newly launched apartments in non-regulated areas is increasing.

In Cheonan-si, Chungnam, Sambu Construction plans to open a cyber model house for ‘Cheonan Sinbang Sambu Renaissance’ on the 14th and start sales. ‘Cheonan Sinbang Sambu Renaissance’ is located at 230-9 Sinbang-dong, Dongnam-gu, Cheonan-si, and will be developed with 8 buildings ranging from 2 basement floors to 25 floors above ground, totaling 830 households with units of 59, 75, and 84㎡.

Jeil Construction plans to launch ‘Unjeong New Town Jeil Punggyeongchae Grand First’ in Paju, Gyeonggi Province, within this month. The complex allows access to major urban centers such as Seoul, Gimpo, and Ilsan via major roads like Jayuro and 2nd Jayuro, and benefits from transportation improvements including the GTX-A line (scheduled to open in 2023). The complex is located in Block A5, District 3, Unjeong New Town, Paju-si, Gyeonggi Province, consisting of 24 buildings from 2 basement floors to 28 floors above ground, with a total of 1,926 households ranging from 59 to 84㎡.

HDC Hyundai Development Company and POSCO Construction plan to sell ‘Gumi I-Park The Sharp’ in Gumi, Gyeongbuk, within this month. The complex is within walking distance to Gumi Elementary School located right next to it, and commuting to the Gumi National Industrial Complex, where companies such as Samsung Electronics, LG Electronics, LG Innotek, and LS Cable are located, is convenient via nearby Gumi Jungang-ro and Industrial-ro. The complex is located at 330-2 Wonpyeong-dong, Gumi-si, Gyeongbuk, with a maximum height of 42 floors above ground, 12 buildings, ranging from 39 to 101㎡, totaling 1,610 households, of which 1,314 are general sale units.

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