"Balloon→Regulation→Balloon"... Inflated Housing Prices in Busan, Cheonan, and Changwon

'Hundreds of Millions Rise, Tens of Millions Fall' Learning Effect Stimulates Buying
Cheonan and Changwon Also Continue Uptrend... Pinpoint Regulations Pointedly Distort Real Estate Market
"Investment Demand Already Searching for Next Balloon"

Since the government designated Gimpo in Gyeonggi Province, five districts in Busan, and Suseong District in Daegu as regulated areas due to overheated housing prices, a balloon effect has appeared in the surrounding areas.
[Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] Since the government designated overheated housing markets such as Gimpo in Gyeonggi Province, five districts in Busan, and Suseong-gu in Daegu as regulated areas, a balloon effect has appeared in the surrounding regions. Although the government has hinted at the possibility of additional regulations, the learning effect of "rising by hundreds of millions of won and then dropping by tens of millions" seems to be driving housing price increases. There are also criticisms that the clumsy pinpoint regulations that "press down when prices rise" are actually stimulating the real estate market.

According to the real estate industry on the 6th, the asking price for apartment units in A mixed-use complex in Beomjeon-dong, Busanjin-gu, Busan, recently rose by more than 400 million won. This happened right after Haeundae, Suyeong, Dongnae, Yeonje, and Nam districts were designated as regulated areas on the 19th of last month. On the 12th of last month, an 84㎡ (exclusive area) unit on the 31st floor of this apartment was traded at 850 million won, but currently, the asking prices for units on the 32nd and 42nd floors reach 1.3 billion won. A representative from A Real Estate Agency in this area said, "This apartment was traded in the 500 million won range earlier this year," adding, "There are many purchase inquiries, but the high asking prices make actual deals unlikely. However, homeowners who have witnessed the balloon effect in various places have very high expectations for housing price increases."

In fact, according to the weekly apartment trend report for the fifth week of November released by the Korea Real Estate Board, the five districts designated as regulated areas all saw a slowdown in price increases: Haeundae-gu (0.62%→0.32%), Suyeong-gu (0.43%→0.33%), Dongnae-gu (0.56%→0.35%), Yeonje-gu (0.47%→0.29%), and Nam-gu (0.74%→0.57%). However, apartment prices in non-regulated areas that remained outside the regulation either jumped or maintained high growth rates. Busanjin-gu recorded a high increase of 1.03% last week and 0.89% this week. Gijang-gun (0.34%→0.80%), Gangseo-gu (0.52%→0.68%), Sasang-gu (0.29%→0.59%), and Saha-gu (0.29%→0.47%) also saw larger increases.

Outside Busan, rapid housing price increases are also appearing in various local areas such as Ulsan, Changwon in Gyeongnam, and Cheonan in Chungnam. Most of these are non-regulated areas that escaped the government's designation as regulated zones. For example, a 125㎡ unit in The Sharp Central Star in Bujeon-dong, Busanjin-gu, was sold for 800 million won on the 20th of last month, right after the regulation. This complex was traded at 599 million won in October, meaning the price rose by more than 200 million won in just one month. The value of pre-sale rights is also rising sharply. An 84㎡ unit in Raemian Urban Park in Yeonji-dong was traded at 890 million won on the day the regulated areas were announced, which was 150 million won higher than the previous price.

Despite the recent overheating of the real estate market, housing prices in Cheonan and Changwon, which were not included in the regulated areas, continue to rise. For example, in Buldang-dong, called the "Gangnam of Cheonan," an 84㎡ unit in Buldang Hoban Summit Place Center City was traded at a record high of 720 million won on the 19th of last month. This is a 30 million won increase from the highest price of 690 million won recorded in October. Currently, the asking price for mid-level units in this apartment is 1.1 billion won.

In Changwon, a 119㎡ unit in Yongji The Sharp Lake Park in Yongho-dong, Uichang-gu, was traded at a record high of 1.45 billion won on the 25th of last month. This is a 420 million won increase from the previous record high of 1.03 billion won set in May. Currently, units of this size are off the market, but smaller 101㎡ mid-level units are listed at 1.4 billion won.

In particular, in Changwon, there has been a buying frenzy in older apartments such as Eun-A in Sinwol-dong, Uichang-gu, and Banlim Lucky in Bansong-dong, Seongsan-gu. This is because apartments with a publicly announced price below 100 million won require only a 1% acquisition tax even if purchased by multi-homeowners. A 79㎡ unit in Eun-A was sold for 700 million won on the 20th of last month, which is 100 million won higher than the previous record high of 600 million won set about 20 days earlier. A representative from B Real Estate in Sinwol-dong said, "Although buying activity has slowed compared to October after the government hinted at the possibility of designating regulated areas, some people still buy despite warnings that prices are at their peak," adding, "There is a strong expectation that prices will not fall as much as they rose, even with regulations."

On the other hand, there are also demands expecting another balloon effect to appear after the designation of regulated areas in Uichang and Seongsan districts. The cycle of regulation → balloon effect → regulation → balloon effect is repeating endlessly. A representative from B Real Estate said, "I have heard that many outside investors have already entered Masan Hoewon-gu for pre-sale rights or houses with publicly announced prices below 100 million won." Accordingly, Gyeongsangnam-do is also considering designating these areas as preliminary regulated zones if abnormal signs are detected.

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