Panic Buying Again Over Lease Laws 2... 'All Remedies Ineffective'

November transaction volume not yet fully tallied, surpasses October
Jeonse prices exceed sales prices from a year ago
Market anxiety spreads

Surge in outer Seoul areas like Guro and Geumcheon
Dormant Gangnam transactions jump 42.2%

Soaring Jeonse prices lead to "Better to buy a house"
Market calls for "Increase supply and lower transaction taxes"

[Asia Economy reporters Chunhee Lee and Donghyun Choi] As the transaction volume in the Seoul area last month has already surpassed that of October, concerns about market instability are spreading. Although the government has tightly restricted transactions by multi-homeowners, who have been identified as the main cause of rising house prices through a series of high-intensity regulations, it is being evaluated that the measures have effectively been neutralized by the 'panic buying' caused by the rental crisis. In some complexes, cases have emerged where rental prices have exceeded the sales prices from a year ago, leading to analysis that desperate buyers are returning to active purchasing.

Fear, Not Expectation, Fueled the Buying Frenzy

According to the apartment transaction volume statistics from the Ministry of Land, Infrastructure and Transport's Real Transaction Price Disclosure System on the 14th, the increase in sales was particularly noticeable in the outskirts of Seoul last month.

In Guro-gu, apartment sales transactions last month reached 370 cases as of this day, a 60.2% increase compared to 231 cases in October, showing the highest growth rate among the 25 autonomous districts of Seoul. Following were Geumcheon-gu (50.8%), Gangnam-gu (42.2%), and Dobong-gu (21.9%). Except for Gangnam-gu, many of the top districts in transaction volume growth are relatively affordable outer areas.

The representative of A Real Estate Agency in Gaebong-dong, Guro-gu said, "As prices have steadily risen this year, inquiries mainly from genuine buyers who have become anxious are continuing. Since it is mainly genuine demand, properties without tenants receive purchase inquiries immediately upon listing and transactions are taking place, while rental prices are soaring and listings are disappearing."

Notably, this increase in transactions has already been confirmed in about half of the 25 districts, 12 districts, even though there are still about fifteen days left for the real transaction reporting deadline. Mapo-gu reported 183 cases, the same as the previous month, while 12 districts including Gangbuk-gu (-43.7%) and Jungnang-gu (-41.4%) still have fewer transactions than the previous month. However, in Gangbuk-gu, the 76 cases reported so far appear to be a base effect after a sharp increase from 87 cases in September to 135 cases in October.

Prices Continue to Rise Alongside Increasing Transactions

As buying demand grows in the outskirts, prices are also rising. Lotte Castle Gold Park Phase 1 in Siheung-dong, Geumcheon-gu, which recorded the first real transaction over 1 billion KRW for an 84㎡ (exclusive area) apartment in Geumcheon-gu at 1.04 billion KRW in February, is now seeing 59㎡ units approaching 1 billion KRW. The 59㎡ unit in this complex surged to 973 million KRW on the 3rd of last month.

A representative of B Real Estate in Siheung-dong said, "Not only new buildings but also older ones are continuing to rise in price. Many are moving from central Seoul, but inquiries are also coming from nearby metropolitan areas such as Gwangmyeong and Anyang, aiming to enter Seoul."

In Sindorim-dong, Guro-gu, the 'Sindorim SK View' 84㎡ unit recorded a new high at 1 billion KRW last month, and in Gireum-dong, Seongbuk-gu, 'Gireum Raemian Phase 1' changed hands at 1.015 billion KRW, showing simultaneous price increases across Seoul.

Increasing Buying Demand Spreads to Gyeonggi Province

Apartments stand in a row in Unjeong New Town and Ilsan New Town, as seen from the border area of Paju-si, Gyeonggi-do. [Image source=Yonhap News]

The recovery in transactions is also occurring in the Gyeonggi region. According to the Gyeonggi Real Estate Portal, as of this day, apartment sales transactions in Gyeonggi Province last month reached 18,019 cases, surpassing 17,700 cases in October. Considering the remaining reporting period for real transactions, it is highly likely to exceed 20,000 cases.

By region, Goyang City's apartment transactions last month increased by a whopping 77.7% to 2,479 cases compared to 1,395 cases in October, showing the highest growth rate. This is analyzed as a reflection effect following the addition of Gimpo City and others to the regulated areas last month. Additionally, Paju City, which has so far avoided designation as a regulated area, showed a sharp increase of 32.8%.

Yang Ji-young, head of Yang Ji-young R&C Research Institute, analyzed, "As the upward trend continues even in provincial areas, there is a perception among buyers that Seoul prices are relatively affordable, increasing the pressure to buy even relatively inexpensive apartments in the outskirts." She added, "To adjust prices, the government should implement policies that increase the supply of listings in the market. This includes sending supply signals through actual housing construction and increasing supply in the market by temporarily easing transaction taxes."

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