Large Sums of Money Flowing into Non-Regulated Areas in the Seoul Metropolitan Area

6 Locations Including Icheon, Gyeonggi See Spillover Benefits
7,517 Transactions Recorded Until September This Year
1.8 Times Increase Compared to Same Period Last Year
Provincial Areas Also See Double the Trading Volume

[Image source=Yonhap News]

[Asia Economy Reporter Jo Gang-wook] While the phenomenon of an apartment "transaction cliff" is intensifying in major areas such as Seoul recently, some non-regulated areas in the metropolitan area and provinces are seeing transaction volumes double, attracting investment demand. This is a balloon effect of the high-intensity real estate measures targeting major metropolitan areas and provincial metropolitan cities, with small and medium-sized provincial cities, including six non-regulated areas in the metropolitan area such as Icheon-si in Gyeonggi-do, gaining secondary benefits.

According to the monthly apartment sales transaction data from the Korea Real Estate Board on the 5th, from January to September this year, the total number of apartment sales transactions in the six remaining non-regulated areas in the metropolitan area?Gyeonggi-do’s Icheon-si, Yeoju-si, Pocheon-si, Yangpyeong-gun, Yeoncheon-gun, and Gapyeong-gun?was 7,517. Compared to the same period last year (4,125 transactions), this is about a 1.8-fold increase. Among them, the area with the highest transaction volume was Icheon-si, where transactions increased by about 87% from 1,843 in January-September 2020 to 3,452 in the same period in 2021. Other areas with high transaction volumes were Yeoju-si (1,472), Pocheon-si (1,362), Yangpyeong-gun (638), Yeoncheon-gun (301), and Gapyeong-gun (292). All six areas saw transaction volumes roughly double compared to the same period last year.

In these non-regulated areas, anyone aged 19 or older can apply for first-priority subscription regardless of whether they are the head of household or a household member after 12 months of subscription account membership, and there is no restriction on re-winning. Also, the loan-to-value ratio (LTV) can be up to 70%, reducing loan burdens, and resale is possible immediately six months after winning.

As a result, new complexes supplied in non-regulated metropolitan areas are setting new records in the subscription market. In Icheon-si, the "Icheon Xi The Park" complex, which was offered in October, recorded the highest competition rate in the region’s history with an average of 39.78 to 1 and a maximum of 66.82 to 1. Yangpyeong-si also succeeded in closing first-priority subscriptions for all types in all four complexes offered this year.

Small and medium-sized provincial cities are experiencing an unprecedented boom. According to the Ministry of Land, Infrastructure and Transport, the nationwide apartment sales transaction volume in the first half of this year was 373,014, down 17.5% from 452,123 in the first half of last year, but transaction volumes in Naju-si, Jeollanam-do (570 → 1,330), Seosan-si, Chungcheongnam-do (962 → 1,892), and Gimcheon-si, Gyeongsangbuk-do (978 → 1,822) roughly doubled.

More apartments are setting new record prices. In Asan-si, Chungcheongnam-do, an 84㎡ apartment was traded for 720 million KRW (15th floor) in July, setting a new record price. This is a 33.3% increase from 540 million KRW a year ago. In Yangsan-si, Gyeongsangnam-do, which had been suffering from long-term unsold units, an 84㎡ apartment changed hands in July for 748 million KRW (32nd floor), about twice the price of 390 million KRW a year ago.

Construction companies are rushing to supply in non-regulated areas. Ilsin Construction plans to supply "Humanville Edu Park City" in Icheon-si, Gyeonggi-do this month and "Yangpyeong Gongheung 3 District Humanville" (tentative name) in Yangpyeong-gun, Gyeonggi-do in December. Dongbu Construction has opened a cyber model house for "Yeoju Station Centreville Triniche" in Yeoju-si, Gyeonggi-do and started full-scale sales. In the provinces, Geumseong Baekjo plans to supply "Tangjeong Station Yemi Ji" in Asan-si, Chungcheongnam-do this month; GS Construction will supply "Naju Station Xi River Park" in Naju-si, Jeollanam-do; Daebang Industrial Development will supply "Pohang Pentacity Daebang Elium Prestige I·II" in Pohang-si, Gyeongsangbuk-do; and Seohan will supply "Daebong Seohan I Daum" in Jung-gu, Daegu.

An expert in subscriptions said, "As the government expands regulated areas nationwide, investors are flocking to the few remaining non-regulated areas," adding, "You can see the changed market atmosphere as transaction volumes in these areas have significantly increased and excellent subscription results have been achieved."

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