Subscription 'Gwangpung' Gwacheon... Jeonse Crisis is a 'Windless Zone'

Gwacheon Jeonse Prices Down 0.12% Compared to Jeonju
The Only Nationwide Jeonse Price Decline

'Large-Scale Supply' Stabilizes Market
Jeonse Prices Continue to Fall Amid Large Apartment Complex Move-Ins

[Asia Economy Reporter Lee Chun-hee] Gwacheon City in Gyeonggi Province is gaining attention as a safe zone from the ongoing government regulations and the rental crisis caused by the 'Lease 2 Acts'. Even amid the recent 'subscription frenzy' with hundreds of thousands of people flocking to apply for apartments in the Knowledge Information Town, the jeonse (long-term lease) prices have actually dropped by several hundred million won.

According to the KB Real Estate Housing Market Trend Survey on the 16th, as of the 9th, the jeonse prices in Gwacheon fell by 0.12% compared to the previous week. It was the only area nationwide where jeonse prices decreased. This marks the third consecutive week of decline since the 26th of last month. Although the Korea Appraisal Board's weekly apartment jeonse price index rose by 0.13% on the same date, it still shows a 5.80% drop compared to the beginning of the year on a cumulative basis.

Compared to the same period last year when Gwacheon's jeonse prices surged by 6.48%, this is a completely opposite trend. While most regulated areas showed a downward trend last year during the same period, this year they have rebounded with increases of up to 45% (Sejong), showing a contrasting pattern.

In Wonmun-dong, Gwacheon, the 'Raemian Sure' apartment with an 84㎡ (exclusive area) has been leased at prices ranging from 650 million to 819 million KRW this month. This is a significant drop compared to the record high of 1.07 billion KRW reached in June. Similarly, in Byeolyang-dong, the 'Jugong 5 Complex' 124.03㎡ unit was leased for up to 800 million KRW in June and July, but last month the lease contracts were signed between 600 million and 750 million KRW.

A panoramic view of 'Gwacheon Weverfield' in Gwacheon-si, Gyeonggi Province. It is a large apartment complex with 2,128 households scheduled for occupancy in January next year. (Photo by Lee Chunhee)

The industry cites 'supply' as the biggest factor behind this decline. Until last year, there was virtually no new move-in supply in Gwacheon. However, with large-scale move-ins of over 3,000 households annually scheduled for this year and next, the market is maintaining stability.

In fact, Gwacheon's jeonse prices have fluctuated in line with large-scale move-ins. While other areas saw jeonse prices continue to rise in March and April, Gwacheon experienced a decline. Although the spread of COVID-19 and the government's strengthening of first-priority local residency requirements had some impact, the move-in of 1,571 households at 'Gwacheon Prugio Summit' is analyzed as the biggest influence.

After the completion of move-ins at this apartment complex, jeonse prices showed an upward trend again, but with the upcoming move-ins of 1,371 households at 'Gwacheon Central Park Prugio' next month and 2,128 households at 'Gwacheon Weverfield' in January next year, a large volume of jeonse supply is expected to flood the market, causing prices to weaken once more.

Another factor contributing to market stability is that as the apartment subscription in Gwacheon Knowledge Information Town nears its final stage, no additional subscription demand is flowing in. Currently, apart from the S8 block (659 households), the apartments in the Knowledge Information Town that have not yet recruited residents are limited to rental housing such as newlywed hope towns and happy housing.

Experts view the stabilization of Gwacheon's jeonse market as a result of 'market logic at work.' Kim Hak-ryeol, head of the Smart Tube Real Estate Research Institute, said, "In a city with a total apartment scale of only about 20,000 households, the continued supply of large complexes is causing jeonse prices to fall," adding, "Ultimately, the recent jeonse crisis shows that it must be resolved through the activation of private jeonse supply."

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