‘Small Investment Haven’ Apartments Under 100 Million Won Officially Priced Frozen... Concerns Over ‘Kkangtong Jeonse’ Emerge

Anseong Jueun Cheongseol Ranked No.1 in Transactions Last Year... Monthly Average 42.5 Deals → 7 Deals Last Month
Exclusive 39㎡ Price Drop Up to 70 Million KRW in 3 Months
Jeonse Prices Exceed Sale Prices... Concerns Over 'Kkangtong Jeonse' in Some Complexes

Apartment buildings in the Seoul area (Photo by Yonhap News)

[Asia Economy Reporter Ryu Taemin] The apartment market with publicly announced prices under 100 million won, which had been popular among investors due to low acquisition tax, appears to be rapidly freezing. In some complexes, prices are falling, raising concerns about "empty shell jeonse" where the jeonse deposit exceeds the sale price.

Jueun Cheongseol Apartment in Jinsari, Gondo-eup, Anseong-si, Gyeonggi-do, which had the highest transaction volume among single apartment complexes nationwide last year, recorded 511 transactions last year. With a total of 2,295 households, this means that one out of every four units changed owners during the year. As the government raised the acquisition tax rate for multi-homeowners up to 12%, but made exceptions for houses with publicly announced prices under 100 million won, many small-scale outside investors trying to avoid government regulations flocked, concentrating transactions.

However, since the end of last year, the real estate market has frozen, and complexes with publicly announced prices under 100 million won have also been directly hit. As fatigue from rapid price increases and a wait-and-see attitude ahead of the presidential election overlap, investment sentiment has weakened, causing transaction volumes to plummet and prices to fall. According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system on the 7th, Jueun Cheongseol Apartment recorded only 7 transactions last month. This is a complete reversal from the average monthly transaction volume of 49 units until October last year.

The 39㎡ (exclusive area) units in this complex showed price declines, with actual transactions recorded at a minimum of 105 million won in December last year. This price is 70 million won lower than the highest price of 175 million won in September last year for this unit size.

The nearby Jueun Punglim Apartment, which ranked high in transaction volume last year, is in a similar situation. This complex had an average monthly transaction volume of 48 units from January to October last year, but it shrank to 11 units in November, and 8 and 14 units in December and January, respectively. The 39㎡ unit in this apartment also changed hands at a minimum price of 109 million won on the 10th of last month, dropping more than 40 million won from the highest price of 150 million won in September last year.

Jeonse Prices Exceed Sale Prices... Concerns Over ‘Empty Shell Jeonse’

As sale prices fall, there is also a phenomenon where jeonse prices surpass house prices. Five jeonse contracts for the 39㎡ units in Jueun Cheongseol were signed last month at 120 million won, which is more than 10 million won higher than the lowest sale price for that unit size. Similarly, a jeonse contract for the 39㎡ unit in Jueun Punglim was signed on the 3rd at 120 million won. This price is higher than five of the seven sale contracts for that unit size concluded in the past two months.

Seo Jin-hyung, president of the Korea Real Estate Society (professor at Gyeongin Women's University), said, "The publicly announced price under 100 million won apartments, which had been popular due to eased capital gains and acquisition taxes, are recently showing signs of stagnation as investment sentiment weakens. There is a risk that tenants may not get their jeonse deposits back or that the house may go to auction, so caution is needed."

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