"Pressing the Capital Area, Local Purchases Surge"... Half of Apartments in Cheongju Heungdeok-gu Bought by Outsiders in May

Areas Designated as Regulated Zones After the June 17 Measures Due to Soaring Housing Prices
Proven That Outsiders Raised Housing Prices... "Avoiding Capital Region Regulations by Moving to Provinces"

[Asia Economy Reporter Onyu Lim] It has been revealed that investment from outsiders is concentrated in the Chungcheong region, including Sejong, Chungbuk, and Chungnam. In particular, in Heungdeok-gu, Cheongju, Chungbuk, which was recently designated as a regulated area due to a sharp rise in housing prices, more than half of the transactions in May were made by outsiders.

According to Zigbang on the 6th, an analysis of apartment sales transactions from January to May this year showed that the proportion of outsider transactions in Sejong, Chungbuk, and Chungnam was 46.3%, 32.5%, and 30.2%, respectively. Ham Young-jin, head of Zigbang Big Data Lab, explained, "In the case of Sejong City, due to its nature as an administrative complex city, the frequency of external demand entry is high, but in Chungbuk and Chungnam, the proportion of outsider transactions increased significantly as external investment demand surged this year."

The increase in Cheongju, Chungbuk, was particularly notable. A total of 7,932 sales were made up to May this year, of which 2,744 transactions, accounting for 34.6%, were purchases by residents from outside Cheongju and Chungbuk. In Heungdeok-gu, Cheongju, among the 1,079 transactions in May, 57 were by Seoul residents and 518 by residents outside Chungbuk, pushing the outsider purchase ratio (53.3%) above half.

Heungdeok-gu is one of the highly preferred residential areas, with many newly built residential-commercial complexes centered around Bokdae-dong, and convenience facilities such as Seo Cheongju IC, terminals, and department stores densely located. Additionally, with newly built apartments centered around Technopolis and Osong Bio-Industrial Complex, the jeonse (long-term deposit lease) rate is high, creating a favorable environment for gap investment. Furthermore, the announcement on May 8th of the attraction of the synchrotron accelerator accelerated the entry of investment demand.

In the case of Shinyoung Well City 1st in Bokdae-dong, 94 transactions were made in May alone after the attraction of the synchrotron accelerator. This is a high figure, accounting for 21.2% of last year's total transactions (444). Kumho Eoullim also recorded 65 transactions, reaching about 93% of last year's total transactions. Although cheaper than Bokdae-dong, Osong, where the bio-complex is located, exceeded last year's transaction volume in May. Osong Hoban Verdiium had 40 transactions last year but recorded 46 transactions in May this year alone.

Lab head Ham said, "It seems that Cheongju was very attractive in May to gap investors who shifted their focus to local areas to avoid regulations in the metropolitan area," adding, "Compared to other regions, the high jeonse rate reduces investment costs, and it was a non-regulated area."

However, with Cheongju included in the regulated areas by the June 17th measures, it is expected that additional external investment demand will face limitations. Mortgage loans will be adjusted from 70% to 50%. In addition, tax regulations such as capital gains tax and comprehensive real estate tax have been strengthened, and the environment has become more stringent, requiring submission of a funding plan, among other things.

With the end of short-term favorable conditions and the start of regulations, the apartment market in Cheongju is expected to show a pause for breath for the time being. However, there are concerns that market instability caused by the 'balloon effect' may recur, where investment demand concentrates in areas with development prospects or non-regulated areas avoiding regulations amid abundant liquidity due to interest rate cuts.