National 2-Hour Railway Network... Gangneung, Expectations for Non-Regulation + Clean Environment Effects [2022 Real Estate One Pick]

As the downward trend in housing prices spreads, concerns are mounting that local markets, which have relatively fewer actual demand groups, will be the first to be hit. However, experts predict that just as demand has concentrated on the ‘smart one house’ in the metropolitan area recently, similar trends will appear in local areas despite the overall economic downturn. Gangneung in Gangwon-do is considered a representative example.

One factor raising expectations for Gangneung is the expansion of the metropolitan transportation network. According to the Ministry of Land, Infrastructure and Transport and Gangneung City, the Donghae Northern Line project connecting Gangneung and Jejin began construction on the 5th, aiming for completion in 2027. Under the 4th National Railroad Network Construction Plan (2021?2030), projects such as the Incheon?Gangneung Line, Mokpo?Gangneung Line, and Busan?Gangneung Line have also been finalized for full-scale implementation. If all projects are completed as scheduled by 2027, access to Gangneung from anywhere in the country will be possible within about two hours.

The railway network has been a representative positive factor driving up local housing prices. The opening of the Seoul?Gangneung KTX in November 2017 alone caused housing prices in the Yeongdong area to surge. Compared to one year before the opening, housing prices rose by 14% in Yangyang-gun, 13% in Sokcho-si, and 8% in Gangneung-si. This contrasts with Gyeonggi-do’s 4% increase during the same period.

The coexistence strategy with the pandemic, represented by ‘With Corona,’ is increasing demand for coastal cities. The turnaround in the real estate markets of Gangwon-do and Jeju-do, which had been stagnant for several years, was significantly influenced by COVID-19. With overseas travel restricted, travel demand shifted domestically, causing housing prices and transaction volumes to surge. Last year, the apartment sales transaction volume in Gangwon and Jeju exceeded the previous year’s total even though December’s data had not yet been compiled.

Gangwon and Jeju are not only COVID-19 clean areas but also the only ‘regulation-free zones’ nationwide, which attracts investment demand. Among the 17 metropolitan cities and provinces nationwide, only Gangwon and Jeju are entirely exempt from regulations. They can apply a maximum loan-to-value ratio (LTV) of up to 70%, and various regulatory hurdles such as subscription qualifications and resale restrictions are low. The ‘Gangneung Lotte Castle Signature’ launched in August last year recorded a record-high competition rate of 46.8 to 1 in the first subscription, the highest ever in the province.

However, experts advise caution against ‘blind investment.’ In Gangneung’s case, about 2,900 households are scheduled to move in by 2024, exceeding the appropriate demand of about 1,000 households. This suggests a possibility of adjustment due to short-term supply-demand imbalance. An industry insider said, “Just as polarization between the metropolitan area and local regions is intensifying, polarization will also occur within local areas in the future. It is necessary to examine locations focusing on mountain and sea views and transportation and to select areas with steady transaction volumes.”

[2022 Real Estate One Pick]

1. Subscription

2. Redevelopment

3. Reconstruction

4. Local

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