Trying to Control Housing Prices with Real Estate Regulations, but Suwon Housing Prices Remain Unstoppable

Apartment Prices Still Rising After 2.20 Measures... Transactions Continue Steadily
Many Factors for Price Increase Including Transportation Benefits and High Ratio of Old Apartments

"Although the entire Suwon area has been designated as a regulated zone, it does not seem to have significantly affected apartment prices. In fact, Hillsstate Yeongtong in Mangpo-dong, Yeongtong-gu, Suwon is currently trading at around 900 million KRW for an 84㎡ unit. Before the February 20 measures were announced, transactions were between 840 million and 860 million KRW... Rather, the designation as a regulated area seems to have raised expectations of price increases, leading to more prospective buyers." (L Real Estate Agent, Mangpo-dong, Yeongtong-gu, Suwon)

Among the 'Suyongseong' areas, although the entire Suwon region has been designated as a regulated zone, the real estate market is still soaring. Contrary to expectations that regulations would slow the market, prices are rising and transactions continue steadily. Despite the government's real estate regulations, the Suwon real estate market is going its own way.

After the February 20 measures, prices rose and transactions remained steady... influenced by learning effects in Paldal-gu, Suwon

According to Real Estate 114 data, in the first week of March, apartment prices in Suwon rose 0.55% after the designation as a regulated area. According to actual transaction prices surveyed by the Ministry of Land, Infrastructure and Transport, an 84㎡ unit in Hillsstate Yeongtong, Mangpo-dong, Yeongtong-gu, Suwon, was traded on February 29 for 860 million KRW (25th floor). This is 20 million KRW higher than the 840 million KRW transaction on February 5 (28th floor) before the regulations. Similarly, a 59㎡ unit in I-Park City Complex 5, Gwonseon-dong, Gwonseon-gu, Suwon, was traded for 380 million KRW (7th floor) on February 7, but after the regulation announcement, it was traded for 408 million KRW on February 29.

Transactions are also steady. From February 20 to 29, the number of apartment sales transactions in Suwon was 257 according to Ministry of Land, Infrastructure and Transport data. Jangangu had 110 transactions, Yeongtong-gu 98, Paldal-gu 40, and Gwonseon-gu 9. Despite the regulations, buyers are still purchasing apartments.

The industry views the regulations as a factor that may actually increase Suwon's housing prices due to a market learning effect. When some areas in Seoul and the metropolitan area were designated as regulated zones, prices rose rather than fell, contrary to expectations.

On December 28, 2018, the Ministry of Land, Infrastructure and Transport additionally designated three areas?Paldal-gu in Suwon, Suji-gu and Giheung-gu in Yongin?as regulated zones. These areas were added due to factors such as favorable railway transportation developments that could drive price increases. After regulation, these three areas showed further price increases.

According to Real Estate 114 data, Paldal-gu in Suwon rose 0.38% in the month following the designation (December 2018 to January 2019). At that time, Yeongtong-gu, which was not designated as a regulated area, remained flat, while Gwonseon-gu and Jangan-gu rose 0.31% and 0.1%, respectively, both lower than Paldal-gu. Subsequently, Paldal-gu rose 13.62% over one year after designation (January 2019 to February 2020). Yongin showed similar trends: Suji-gu rose 10.37% and Giheung-gu 3.23% over one year, maintaining a steady upward trend.

An industry expert stated, "The areas designated as regulated zones have factors such as positive developments that inevitably drive housing prices up, so despite the regulations, local real demand and external investors continue to show buying interest. In Suwon's case, although the entire area was recently designated as a regulated zone, Paldal-gu, which was designated earlier, still shows an upward trend, so areas like Yeongtong-gu are unlikely to show a downturn."

Active transportation developments and a high proportion of aging apartments... factors driving Suwon housing price increases

In fact, Suwon still has positive factors that can boost the real estate market. The most notable is the 'GTX-C Line,' which connects Yangju in Gyeonggi Province to Suwon. It passed the preliminary feasibility study in December last year. Construction is scheduled to begin at the end of 2021, with operations targeted for 2026. Once opened, travel from Suwon to Gangnam Samsung Station will take less than 20 minutes.

The double-track railway from Indeokwon to Dongtan is also a positive factor influencing Suwon's real estate market. This double-track railway connects Indeokwon in Anyang, passes through Suwon, and links to Dongtan in Hwaseong. Construction is planned to start in 2022 and open in 2026.

The high proportion of aging apartments compared to neighboring areas also contributes to price increases centered on new apartments. According to Real Estate 114 data, in Suwon, there are currently 166,946 apartment units over 15 years old (built before 2006), accounting for 62.13% of all apartments in Suwon. This is higher than the Gyeonggi Province average of 55.55%, and significantly higher than neighboring Hwaseong City (20.10%) and Yongin City (55.20%). Therefore, demand for new apartments is expected to steadily drive prices up.

In this context, new apartments about to be launched in Suwon are attracting attention. GS Construction's 'Yeongtong Xi' in Mangpo-dong, Yeongtong-gu, Suwon, scheduled for sale in March, is subject to regulated area restrictions, but industry insiders say inquiries about the sale are continuously increasing.

An industry insider said, "Despite the impact of COVID-19, many buyers are curious about the sale schedule and carefully inquire about changed subscription conditions and loans. Given the current atmosphere, subscription results are expected to be favorable."

A sales expert analyzed, "Suwon has been an undervalued area, so even as a regulated zone, transportation developments and other factors leave room for price increases. Considering the steady price rise in Paldal-gu, which is already a regulated area, the Suwon real estate market is unlikely to weaken easily."