Two Weeks of Land Transaction Permit System... Transactions Plummet, Asking Prices Remain Unchanged

Apgujeong, Yeouido, Mokdong 0 Apartment Transactions in 2 Weeks
Reconstruction Hopes Keep Prices Soaring Despite Regulations
Sanggye Balloon Effect... Only Sanggye Jugong Recorded 12 Transactions

Yeouido Apartment Complex as Seen from the 63 Art Observatory in Seoul
[Image Source=Yonhap News]

[Asia Economy Reporter Onyu Lim] "Buy inquiries have completely stopped. But the asking prices haven't dropped. Since the Seoul city government essentially pointed out the areas for reconstruction, who would lower the prices?" (A representative from a real estate agency in Yeouido-dong, Seoul)

The areas designated as land transaction permission zones?Apgujeong in Gangnam-gu, Yeouido in Yeongdeungpo-gu, Seongsu in Seongdong-gu, and Mok-dong in Yangcheon-gu?have faced a real estate transaction freeze for two consecutive weeks. However, the regulations are being interpreted as a signal for reconstruction, and the elevated asking prices show no signs of falling. On the other hand, Sanggye-dong in Nowon-gu, which avoided the permission zone designation, has seen a surge in transaction volume due to a 'balloon effect.'

According to the Ministry of Land, Infrastructure and Transport's Real Transaction Price Disclosure System, from the 27th of last month until today, there have been zero apartment sales recorded in Apgujeong, Yeouido, Seongsu, and Mok-dong over the past two weeks. These areas were designated as land transaction permission zones by Seoul Mayor Oh Se-hoon to block speculative demand ahead of reconstruction normalization, with the designation effective from the 27th of last month.

In permission zones, purchasing real estate with land shares exceeding a certain area requires approval from the district office chief. For residential real estate, there is a two-year actual residence requirement, making sales with jeonse (long-term lease) impossible. Due to these strict sales regulations, buying demand has weakened, causing transaction volumes to plummet, according to frontline real estate agencies. A representative from a real estate agency in Mok-dong said, "Those who wanted to buy already did so before the regulations," adding, "Now gap investments are impossible, and since it's the early stage of the land transaction permission zone, the atmosphere is to wait and see."

Especially in Apgujeong-dong, the transaction freeze is pronounced due to a sharp decrease in listings following the successive approvals of union establishments in districts 2, 3, 4, and 5. This is because in reconstruction complexes where union establishment is completed in speculative overheating zones, only one-homeowners who have owned for over 10 years and lived for over 5 years can transfer union member status. A representative from a real estate agency in this area predicted, "There are hardly any buyers, and since there are very few union member succession listings, transaction volume will likely drop to one-tenth of the previous level for the time being."

Although buying demand has dried up, asking prices remain set higher than actual transaction prices. Mayor Oh's designation of land transaction permission zones is being interpreted not as a simple measure to curb housing prices but as a countdown signal for reconstruction, increasing development expectations. For example, the asking price for a 110㎡ unit in Apgujeong Shinhyundai is 3.5 billion KRW, which is 250 million KRW higher than the actual transaction price of 3.25 billion KRW in April. The asking price for a 95㎡ unit in Mokdong New Town 5 Complex is also 2.13 billion KRW, 50 million KRW higher than the previous transaction price of 2.08 billion KRW (April).

Conversely, in Sanggye-dong, where reconstruction complexes are concentrated but the permission zone designation was avoided, a balloon effect is causing a surge in transaction volume. Over the past two weeks, apartment sales totaled 21, with 12 of those in Sanggye Jugong, where reconstruction efforts have become visible. For example, a 59㎡ unit in Sanggye Jugong 2 Complex was sold on the 28th of last month for 715 million KRW, 66 million KRW higher than the previous highest price of 649 million KRW (January). A representative from a real estate agency in Sanggye-dong said, "Avoiding the land transaction permission zone designation has attracted investment demand," adding, "With expectations of rising housing prices, homeowners are temporarily withdrawing listings, causing prices to surge."

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