This Year's Housing Price Surge Keywords: 'Cheondo, Low Price, Balloon'

Sejong Apartment Price Increase Rate Ranks First Nationwide
Mid-Low Priced Areas Like No, Gu, Gang Also Rising
Regulation Balloon Effect Fuels Housing Prices

[Asia Economy Reporter Yuri Kim] The key words encompassing this year's regions with rapid housing price increases can be summarized as 'relocation, low price, balloon.'

According to KB Real Estate Live On on the 11th, the region where apartment prices have risen the most from the beginning of this year to November is undoubtedly Sejong City. During this period, apartment sale prices in Sejong City surged by 39.38%. This far exceeds the national average (7.80%) and Seoul's increase rate (11.59%) during the same period. A 149.71㎡ (exclusive area) apartment in Hansol-dong, Sejong, First Village Complex 3, was traded earlier this month at 1.7 billion KRW, marking the 'highest price in Sejong.'

The core issue driving apartment prices in Sejong City is the 'capital relocation.' As the ruling party, the Democratic Party of Korea, began serious discussions on capital relocation, housing prices in Sejong City started to soar. Recently, the Democratic Party's National Balanced Development and Administrative Capital Promotion Team announced a phased relocation plan of the National Assembly building, further spreading the upward trend. The population in this area has increased while supply has decreased, also influencing the rapid rise in housing prices. As of the end of October, Sejong City's population was 356,302, a 2.9% increase compared to the end of last year, but the number of apartment move-ins this year in Sejong City did not reach half of last year's volume. According to Real Estate 114, the number of apartment move-ins in Sejong City this year is 5,600 households.

'Mid-to-low price' is another indispensable keyword. The overall increase rate in Seoul this year was led by non-Gangnam areas. Within Seoul, the rise in 'No, Gu, Gang' (Nowon, Guro, Gangbuk) was prominent. They increased by 19.02%, 15.04%, and 15.02%, respectively. Especially, Nowon-gu, where many mid-to-low price complexes are concentrated, saw a significant rise as housing mortgage loans for apartments exceeding 1.5 billion KRW were completely banned under the December 16, 2020 measures, causing the rise rate in major Gangnam areas to slow down. It was also a place where panic buying by the homeless and investment demand for mid-to-low price apartments gathered from early this year.

The government's regulatory 'balloon effect' also fueled the rise in housing prices. Following expansions of regulated areas sequentially in February, June, and November this year, a 'gradual increase' in housing prices nationwide occurred. Many of the regions listed among the top apartment price increase areas are results of the balloon effect. A representative example is the June 17, 2020 measures. Typical balloon effect regions were Gimpo (15.48%) and Haeundae-gu, Busan (16.27%), which showed rapid increases until they were designated as adjustment target areas last month. Although most areas in the metropolitan area were designated as adjustment target areas under the June 17 measures, Gimpo and Paju were excluded, causing both actual demand and investment demand to flood into Gimpo, which has relatively good access to Seoul. Due to this influence, Gimpo surged by 14.93% in the second half of this year alone. Haeundae-gu in Busan also showed a rapid rise, highlighted by its relatively lower price compared to other major local metropolitan areas, its status as a non-regulated area after being removed from the adjustment target area in November last year, and the influx of metropolitan area investment demand seeking to avoid regulations. Haeundae-gu rose by 13.70% in the second half of the year alone.

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