"Buy Wrong, Get Water Blisters"... Villa Market Frozen by 2·4 Measures

Villa Market Booming Amid Recent Apartment Jeonse Shortage
Transactions Plummet After Policy Announcement Due to 'Priority Supply Rights'
"Who Would Buy When Cash Settlement Is Possible?"

[Asia Economy Reporter Onyu Lim] Since the 2·4 real estate measures, the Seoul row house and multi-family (villa) housing market has faced a transaction cliff. This is due to growing anxiety that public intervention could lead to unwanted cash settlements. On real estate online communities, phrases like "Anyone who buys a villa now is a fool" are circulating, reflecting increasing dissatisfaction and unease in the market.

According to the maintenance industry and frontline real estate agencies on the 9th, since the government announced the supply measures on the 4th, centered on public-led urban development and maintenance projects, non-apartment transactions such as Seoul row houses and multi-family housing have sharply contracted. In particular, transactions have completely stopped in areas densely populated with old houses.

A representative from real estate agency A in Seongbuk-gu, Seoul, said, "Who would want to buy now when there is a risk of becoming a ‘muldakji’ (cash settlement target without a move-in right) if you buy incorrectly?" and added, "The government is stirring up fear and killing only the villa market."

This transaction cliff in the villa market stems from the government’s ‘priority move-in rights’ introduced as a speculative prevention measure. The controversy arose because the eligibility criteria for priority move-in rights were set not by the usual ‘designation date of the maintenance planned area’ but by the ‘announcement date of the measures.’ This means that if one hastily buys an old villa or apartment and the area is later designated as a public direct implementation maintenance project or urban public housing complex project zone, they may not receive a new apartment allocation and could be subject to cash settlement at market price or lower.

Until last month, the Seoul villa market was booming due to the apartment jeonse (lease) shortage and the public redevelopment boom. Last month, the number of sales of Seoul row houses and multi-family housing reached 4,049 based on reported cases as of this day, surpassing apartment sales at 3,661. However, after the announcement of the measures and the possibility of cash settlements, the situation has completely reversed.

On real estate communities, criticism such as "The government has made all citizens potential cash settlement targets" is pouring in. Mr. B, who revealed that he made a preliminary contract for an old villa in Songpa-gu earlier this month, lamented, "Apartment jeonse prices are so high that I planned to live comfortably in a villa until they stabilize, but now I’m worried about being cash settled."

The confusion is intensifying as the government announced it will disclose 222 candidate sites for priority consideration in urban public development after the Lunar New Year holiday. A representative from real estate agency C in Jung-gu, Seoul, said, "It’s completely different from last month’s situation," and added, "Even though they say there are candidate sites, they don’t reveal them, so people are reluctant to buy villas anywhere."

Some also express concerns that as a balloon effect of the 2·4 measures, prices of new apartments without uncertainties will rise. In fact, the 59㎡ (exclusive area) unit of Mapo Prestige Xi in Yeomni-dong, Mapo-gu, scheduled for move-in next month, reportedly saw asking prices rise to 1.7 billion KRW, 70 million KRW higher than actual transaction prices right after the 2·4 measures. Park Won-gap, Senior Real Estate Specialist at KB Kookmin Bank, predicted, "The redevelopment and reconstruction markets where public intervention is possible will see a disappearance of buying demand for the time being," and added, "Instead, due to the balloon effect, interest in new apartments among buyers may increase."

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