'Last-Minute' Demand Surges Four Days Before Land Transaction Permit Deadline... Concerns Over Short-Term Price Spike

Apgujeong, Yeouido, Mokdong, Seongsu-dong
Surge in Purchase Inquiries for Reconstruction and Redevelopment Complexes
Yeouido Sibeom Apartments Recorded Highest Price Transactions

[Image source=Yonhap News]

[Asia Economy Reporters Kim Hyemin and Lim Onyu] In the areas of Apgujeong, Yeouido, Mokdong, and Seongsu-dong in Seoul, where the land transaction permit system will take effect starting on the 27th, there is a rush of last-minute buying activity in the reconstruction promotion districts. Although Seoul City designated these areas as land transaction permit zones, a grace period of about five days before enforcement has been given. Due to the gap including the weekend, there are concerns that speculative demand may surge just before the enforcement.

According to the real estate brokerage industry on the 23rd, inquiries about purchases in these areas surged after Seoul City announced the designation of land transaction permit zones. Once designated as a permit zone, transactions of houses, commercial properties, or land above a certain size require approval from the district office chief. Since sales are only allowed for actual residence purposes, ‘gap investment’?buying a house with a lease deposit?is no longer possible. Short-term demand is concentrated on closing contracts before the permit system takes effect on the 27th.

Moreover, the designation of land transaction permit zones is being perceived as a signal for reconstruction, further increasing demand. Especially in the Mokdong New Town area of Yangcheon-gu, local brokers report that purchase inquiries have noticeably increased as Seoul City proposed improvement plans to the Ministry of Land, Infrastructure and Transport to make reconstruction safety inspections more realistic. Currently, the only reconstruction apartment in Mokdong that has passed the safety inspection is New Town Complex 6. A representative from Mokdong A Real Estate Agency said, "Buyers who were only looking for urgent sales have become more eager due to the land transaction permit system and are actively searching for listings."

On the other hand, there are not many properties available for transaction at present. This is because homeowners have withdrawn listings and raised asking prices. The representative predicted, "As asking prices are more than 100 million KRW higher than actual transaction prices, record-high transactions are expected before the 27th."

In fact, in Yeouido, record-high contracts were reported immediately after Seoul City's announcement. A 118㎡ (exclusive area) unit in Sibeom Apartment was traded on the 21st for 2 billion KRW higher than the previous highest price of 2.4 billion KRW, at 2.6 billion KRW. A representative from B Real Estate in the area said, "Since Mayor Oh hinted at the land transaction permit system last week, investors have already started moving. Especially for Sibeom Apartment, since the union has been established, it is not subject to the two-year actual residence regulation, causing asking prices to surge." Sibeom Apartment is the largest reconstruction complex in Yeouido. Although the union was established in 2017, the project was effectively halted as Seoul City blocked individual reconstruction at that time. However, recently Mayor Oh emphasized the necessity of reconstruction by telling President Moon Jae-in to "visit Sibeom Apartment in Yeouido," increasing the possibility of project resumption.

However, there are also forecasts that actual transactions will not be many. In Apgujeong-dong, Gangnam-gu, where ultra-high-end complexes are concentrated, prices have already soared, and there appears to be little fluctuation despite the permit zone designation. Among the six reconstruction districts in Apgujeong this year, four have seen record-high transactions during the process of union establishment approval. In Seongsu-dong, purchase inquiries have increased, but available listings are limited. A representative from C Real Estate in Seongsu-dong said, "Since Mayor Oh's election, many listings have been withdrawn, and most of the properties to be cleared have already been sold. The redevelopment expectations have already been reflected, and prices are high, so even with the grace period, actual transactions are unlikely to be active."

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