Outsiders Sweep Up Low-Cost Local Apartments... Government Remains Idle

Apartments Under 100 Million KRW in Local Areas
Price Rise as Outsiders Move In
Pyeongtaek, Cheonan, Cheongju, Gangwon-do, etc.
Active Despite Early-Year Crackdowns... No Measures Taken

Apartment complexes viewed from Namsan, Seoul Photo by Yonhap News

Speculation on low-priced housing, evading regulations, is spreading not only in the metropolitan area but also to provincial regions, yet the government has failed to present clear measures, leading to criticism that apartments with a publicly announced price of 100 million won or less have become a 'blind spot for speculation.'

According to the real estate industry on the 14th, recently, online communities related to real estate have been calling low- to mid-priced provincial housing the 'holy land of gap investment.' It is not difficult to find posts searching for complexes with a 'publicly announced price of 100 million won or less' in various communities. This is interpreted as attracting investment due to the perception that prices have risen less compared to the metropolitan area and because low-priced apartments offer significant tax benefits.

Previously, through the July 10 measures last year, the government raised the acquisition tax rate from a maximum of 3% to up to 12% depending on the number of houses owned, but applied only the basic tax rate (1.1%) for publicly announced prices of 100 million won or less. Since then, buying demand has concentrated on low-priced apartments nationwide, including Busan, Chungbuk, and Gyeongnam, for over a year, causing asking prices to rise by tens of millions of won and resulting in price instability.

According to the real estate information platform Asil, over the past three months, the regions with the highest proportion of gap investments nationwide were Gimhae in Gyeongnam, Cheonan and Asan in Chungnam, and Pyeongtaek in Gyeonggi. As of July, Pyeongtaek (481 cases), Cheonan (466 cases), Gimhae (443 cases), and Asan (442 cases) also had the highest number of transactions by outsiders nationwide. This indicates that gap investments by outsiders are concentrating in provincial areas.

In addition, there are reports of many gap investments in low-priced apartments by outsiders in Wonju, Gangwon-do; Cheongju, Chungbuk; and Pohang, Gyeongbuk. In fact, in Heungdeok-gu, Cheongju-si, Chungbuk, among 545 apartment transactions reported from last month to the 14th of this month, 236 cases (43.3%) were for amounts of 150 million won or less. Most of these apartments have a publicly announced price of less than 100 million won. A representative from real estate agency A in the area said, "Purchases of low-priced apartments by outside corporations have been continuing for several months already," adding, "Prices are also continuing to rise."

Concerned about such side effects, the government conducted a real transaction investigation earlier this year targeting major provincial areas such as Changwon and Cheonan, where purchases of apartments priced at 100 million won or less have surged, confirming 1,228 abnormal transactions. However, the investigation was a one-time event, and no clear measures to prevent recurrence have been established since, leading to criticism that its effectiveness is limited. A Ministry of Land, Infrastructure and Transport official explained, "We continue to monitor abnormal transactions and market overheating in major areas," adding, "The expansion of buying demand for apartments priced at 100 million won or less is related to policy aspects such as exemption from acquisition tax surcharges, so consultation with the Ministry of Economy and Finance is necessary."

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