Real Estate Transaction Freeze, Gangwon and Jeju Unaffected... Effects of Deregulation and Clean Environment

Although the housing market is experiencing a deepening transaction freeze, Gangwon and Jeju have emerged as exceptions. This is attributed not only to the balloon effect in non-regulated areas due to stringent housing regulations but also to the increased demand for alternative urban housing amid the prolonged COVID-19 pandemic.

According to monthly housing sales transaction data from the Korea Real Estate Board on the 16th, the number of housing sales transactions in Gangwon Province reached 35,637 from January to October this year, marking a 27.9% increase compared to the same period last year. Jeju also saw transactions rise by 27.5%, from 8,008 to 10,214 during the same period. This contrasts with the nationwide housing sales transactions, which decreased by 12.5%, from 1,022,266 to 894,238.

The market temperature also shows a clear difference. According to the KB Kookmin Bank Liv Real Estate Buyer Dominance Index (as of December 6), Gangwon was the only region nationwide where the index exceeded 100. The Buyer Dominance Index ranges from 0 to 200, with values above 100 indicating more buyers than sellers, and values below 100 indicating more sellers than buyers. Notably, in Sokcho City, the average apartment sale price last month was 213.07 million KRW, an increase of 74.7 million KRW compared to the same period last year.

The buying trend is led by outsiders. As of the end of October, the number of housing sales transactions by non-residents increased from 9,061 last year to 14,191 in Gangwon, and from 2,127 to 2,946 in Jeju. These represent sharp increases of 56% and 38%, respectively, compared to the same period last year.

This phenomenon is interpreted as a balloon effect caused by strengthened real estate regulations centered around the metropolitan area. Among the 17 metropolitan cities and provinces nationwide, only Gangwon and Jeju are entirely exempt from regulation. They can apply a maximum loan-to-value ratio (LTV) of up to 70%, and the thresholds for various regulations such as subscription qualifications and resale restrictions are lower. The spread of remote work due to the prolonged COVID-19 pandemic has also contributed to increased demand for comfortable living environments.

An industry insider said, "The balloon effect in non-regulated areas is emerging due to the high-intensity regulations and rapid housing price increases centered on Seoul, the metropolitan area, and major cities," adding, "The increased demand for clean areas that can substitute for overseas travel, which has become difficult, also appears to have played a complex role."

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