[Report] Suwon Soars Over 200 Million in Two Months... "It Has Risen Too Much"

House Prices Soar 1% Weekly... Visiting Suwon Driving Seoul Metropolitan Area Prices

Gwanggyo New Town's Rapid Rise Pauses, But Redevelopment Near Maegyo Station on Bundang Line Boosts
Suwon Leads Rise as the New 'Bubble Seven'

Sellers' Expectations Push Asking Prices Up
For Now, Transaction Freeze... Market Remains Quiet
Maegyo Area: "Prices Will Rise More Once Resale Fully Begins"

▲ Construction site of 'Maegyo Station Prugio SK View' in Paldal-gu, Suwon-si, Gyeonggi Province (Photo by Lee Chunhee)

[Asia Economy Suwon=Reporter Lee Chunhee] On the 10th, the area around Maegyo Station on the Bundang Line in Suwon, Gyeonggi Province, was a massive construction site. The old downtown area, densely packed with aging houses, was bustling with demolition and excavation work for large-scale redevelopment involving a total of 11,799 households across four zones. Nearby real estate agencies were also lively. Customers arriving separately gathered in small groups to listen to explanations from agents. This atmosphere is quite different from the frozen housing market in Seoul’s Gangnam area.

A representative from M Real Estate in Maegyo-dong said, "Prices have been rising every time the redevelopment project progresses." The head of nearby H Real Estate also said, "The premium on the 84㎡ (exclusive area) occupancy rights in this area has risen by 150 million KRW in just two months," adding, "Prices are still continuing to rise." According to him, after the subscription for one complex ends, unsuccessful applicants are purchasing occupancy rights in other complexes.

While housing transactions in Seoul’s Gangnam area froze due to the government’s December 16 real estate measures last year, the housing markets in the metropolitan area and some local regions are heating up. Over the past seven weeks since the announcement of the measures, house prices have risen more than 2% in the metropolitan area including Suwon, Yongin, Gwangmyeong, Anyang, and Guri cities, as well as in Daejeon and Sejong. The balloon effect of Gangnam regulations is spreading to the 'New Bubble Seven' areas. This is similar to the pattern in 2006 when rising house prices in Gangnam spread to Yangcheon-gu, Bundang, Yongin, and Anyang, creating the 'Bubble Seven.'

According to the weekly apartment sales price index by the Korea Real Estate Board on the 11th, the only seven areas where house prices rose more than 2% over the seven weeks from the announcement last year to June 3 this year are these regions. In Gyeonggi Province, Suwon (4.74%), Yongin (3.23%), Guri (2.36%), Gwangmyeong (2.34%), and Anyang (2.00%) saw price increases exceeding 2%, while Sejong (3.92%) and Daejeon (2.24%) also showed strong upward trends. This sharp rise contrasts clearly with the national average increase of 0.62% and the changes in Seoul and the four Gangnam districts, which were 0.37% and 0.16%, respectively.

▲ Gwonseon 6 District in Suwon-si, Gyeonggi, scheduled for demolition next month (Photo by Lee Chunhee)

Especially in Suwon, various positive factors have driven weekly house price increases of around 1%, leading the metropolitan area’s housing market. The area around Maegyo Station, visited by the reporter, is one of the hottest spots for rising house prices in Suwon city. The Paldal 6 District (Hillstate Prugio Suwon) with 2,586 units, which was publicly sold last December, along with Paldal 8 District (Maegyo Station Prugio SK View · 3,603 units), Paldal 10 District (3,432 units), and Gwonsun 6 District (2,178 units) are either scheduled for sale or in demolition stages. The 84㎡ cooperative occupancy right of Hillstate Prugio Suwon changed hands last month for 770 million KRW. The general sale price of this apartment in December last year was 595 million KRW (standard floor). This is a rapid price increase of 175 million KRW in less than two months. A representative from A Real Estate in the area said, "Suwon city has only a six-month resale restriction," adding, "Once resales become active, prices will rise further."

House price increases in Suwon are appearing comprehensively. The first area to lead the price rise was Gwanggyo New Town. Even before the government’s measures were announced, asking prices rose by hundreds of millions of KRW, signaling the new Bubble Seven phenomenon. The actual transaction price of the 84㎡ unit in 'Jayeon & Hillstate' in Iui-dong within the new town was around 1.05 billion KRW in September last year but soared to 1.27 billion KRW by December. Asking prices are approaching 1.3 billion KRW. The head of G Real Estate in the area said, "There have only been three transactions this year," adding, "The gap between sellers’ and buyers’ desired prices has widened to nearly 200 million KRW, causing transactions to disappear."

▲ 'Hoban Verdiom The First' in Geumgok-dong, Gwonseon-gu, Suwon-si, Gyeonggi-do (Photo by Lee Chunhee)

The situation is similar in the area around Homaesil District in Gwonsun-gu, where prices surged reflecting the extension of the Shinbundang Line. The actual transaction price of the 84㎡ unit in 'Hoban Verdiem The First,' which was up to 590 million KRW in December last year, soared to 770 million KRW last month before transactions stopped. This is because sellers raised asking prices to 900 million KRW despite more than half of the extension section being single-track.

Local real estate agents predict that sellers’ asking prices will be maintained for the time being as homeowners’ expectations are very high. The head of C Real Estate in Geumgok-dong said, "In the current transaction drought, if a desperate buyer bites, that becomes the market price immediately." Because of this, there is a growing concern among local agencies that "Suwon house prices have risen too much."

A Ministry of Land, Infrastructure and Transport official said, "We are closely monitoring the situation in some areas where localized house price increases continue even after the measures," adding, "If there are concerns about overheating, we plan to take immediate necessary actions at any time, including designating regulated areas."