Due to Soaring Apartment Prices... Demand Shifts to Villa Market

Scenery of villa village near Mia Station, Gangbuk-gu, Seoul (Photo by Yonhap News)

[Asia Economy Reporter Ryu Taemin] The demand for villas (row houses and multi-family houses) in Seoul continues to heat up. As apartment prices soar to unprecedented heights, real buyers are flocking to the villa market, with transaction volumes approaching twice that of apartments. In particular, the 20s and 30s age group, who often lack sufficient financial resources, are engaging in 'body tech' by winning auctions for old villas in the Gyeonggi and Incheon areas, aiming for redevelopment and reconstruction.

According to the Seoul Real Estate Information Plaza on the 4th, the number of villa sales transactions in September was recorded at 2,431 as of that day. This is nearly double the apartment sales volume of 1,372. Since the housing transaction reporting period is up to 30 days from the contract date, the number of transactions may change going forward, but since the comparison is based on the same date, this trend is expected to continue.

Experts explain that the recent skyrocketing apartment prices and sharply rising jeonse (long-term deposit lease) prices have increased the burden on real buyers, who have consequently turned to the relatively affordable villa market. The redevelopment activation policies implemented by the Seoul city government and the central government are also cited as a main reason why the villa market is popular among buyers.

For the time being, the so-called 'body tech' trend is also popular, where people live in old houses while aiming for future opportunities such as redevelopment or transportation benefits. Senior researcher Lee Joo-hyun of Gigi Auction said, “In particular, older villas generally have larger land shares than new buildings, so they are considered to have higher investment value.”

Buyers Flocking to the More Affordable Old Villa Auction Market

The popularity of old villas aged 20 to 30 years is also growing in real estate auctions conducted by the courts. Competition is heating up with dozens of bidders flocking not only in Seoul but also in relatively affordable Incheon and Gyeonggi villa auctions. In particular, 'body tech' investments targeting cheap first-floor or semi-basement houses among villas, aiming for redevelopment promotion or transportation benefits, are also increasing.

According to Gigi Auction, a court auction specialist company, 26 bidders competed in the auction for a 40㎡ villa in Ganseok-dong, Namdong-gu, Incheon, held the day before. This property, completed in 1995, had an appraised value of 67 million KRW but dropped to a minimum bid price of 22.98 million KRW after three failed auctions. The property was eventually sold for 41.65 million KRW, 81% (18.67 million KRW) higher than the minimum price.

In the outskirts of Seoul and Gyeonggi as well, the phenomenon of old villa auctions attracting double-digit bidders is occurring frequently. The auction for a 60㎡ villa in Naeyu-dong, Deogyang-gu, Goyang-si, Gyeonggi, held on the 17th of last month, attracted 20 bidders despite being a 26-year-old semi-basement property, and was sold for 47.84 million KRW, more than 15 million KRW above the minimum price of 31.55 million KRW. Similarly, a 36㎡ villa in Gusan-dong, Eunpyeong-gu, Seoul, also a 28-year-old semi-basement property, attracted 14 bidders and was sold for 77 million KRW.

Experts explain that as prices for apartments and new villas skyrocket, old villas with lower price entry barriers are also becoming investment targets. Especially in the auction market, prices are considered relatively cheaper than in the sales market, so future returns and capital gains can be maximized.

Song Seunghyun, CEO of Urban and Economy, said, “As the real estate boom continues, expectations have formed that prices of old villas will rise further,” adding, “Old villas can be purchased cheaply, so they are considered valuable as long-term investment products.”

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