New Year Real Estate Market: 'Subscription Frenzy, Relocation, and Jeonse Crisis' Issues Continue

[Asia Economy Reporter Yoo In-ho] The issues that dominated the real estate market in 2020 are expected to continue into the new year.

Keywords such as subscription frenzy, jeonse refugees, balloon effect, supply shortage, and relocation are likely to still permeate the 2021 real estate market. Although the head of the Ministry of Land, Infrastructure and Transport has changed, the domestic real estate market is highly likely to continue its upward trend due to government regulations.

This year, the subscription market is also expected to maintain its frenzy. This is because the sharply rising house prices, relatively low prices, expectations of capital gains, and concerns about supply reduction are likely to play a role. As a result, the cutoff score for apartment subscriptions in Seoul this year is expected to rise further.

Jeonse prices are also likely to increase further. After the implementation of the three lease laws at the end of July last year, the jeonse prices, which had been rising gradually, accelerated their rate of increase. Jeonse prices maintained a rise of 0.06?0.27% until the first half of the year, but the increase widened in July (0.44%), when the new lease law was becoming visible, and in August (0.52%), when the law was enforced.

Dunchon Jugong, which failed to succeed in last year’s pre-sale, is also noteworthy. The most notable complex in last year’s pre-sale market was Dunchon Jugong in Dunchon-dong, Gangdong-gu, Seoul, known as the largest reconstruction project since the founding of Korea. It consists of 12,032 households, with 4,785 units for general sale, and the project cost reaches 3 trillion won.

However, the pre-sale of Dunchon Jugong has ultimately been postponed to this year. Many union members last year considered the pre-sale price of around 29 million won per 3.3㎡ proposed by the Housing and Urban Guarantee Corporation (HUG) inappropriate and have yet to decide whether to apply the price ceiling system or proceed with post-sale.

The relocation surrounding Sejong City is also an issue attracting attention in the real estate market. The area with the highest apartment price increase last year was 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 (11.59%) during the same period. A 149.71㎡ (exclusive area) unit in Hansol-dong, Sejong’s First Village 3 Complex was traded earlier this month at 1.7 billion won, the highest price ever recorded in Sejong.

The core issue driving Sejong City apartment prices is the 'capital relocation.' As the ruling party, the Democratic Party of Korea, began serious discussions on relocating the capital, Sejong City house prices 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, further spreading the upward trend. The population increase in the area combined with reduced supply has also contributed to the sharp rise in house prices.

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