Stagnant Housing Prices in Sejong City

Expectations for Administrative Capital Relocation Drive
Nationwide Highest Growth Rate for 2 Consecutive Weeks

[Image source=Yonhap News]

[Asia Economy Reporter Yuri Kim] There are no signs of cooling in Sejong housing prices. While Seoul housing prices are rather stabilizing, the ruling party’s premature mention of relocating the administrative capital has had the opposite effect of igniting Sejong housing prices.

According to the Korea Real Estate Board on the 7th, Sejong apartment prices surged 2.77% in the first week of August (as of the 3rd). Although this is lower than last week’s 2.95% (as of July 27), it recorded the highest nationwide increase for two consecutive weeks. The Real Estate Board stated, "Amid rising expectations of price increases due to discussions on relocating government ministries, an upward trend appeared across all areas including Saerom and Boram-dong within the Happy City."

Sejong apartment prices have shown a continuous upward trend since the beginning of this year. The increase rate, which was around 1% in February and March, slowed somewhat in April and May but prices jumped again from mid-June. Since the third week of June (0.98%), a high increase rate of 1-3% per week has been recorded. Jeonse (long-term lease) prices also moved in tandem. In the first week of August, Sejong jeonse prices rose 2.41%, marking the highest nationwide increase. This follows last week’s 2.17%, maintaining a 2% range increase.

This movement was largely influenced by the ruling party’s active discussion on relocating the administrative capital. The plan is to make Sejong the administrative center like Washington DC in the United States, and Seoul the economic center like New York. Although first mentioned last month, the party has already formed a task force for completing the administrative capital relocation. Industry insiders express concern that this move is a hastily drawn card to curb soaring Seoul housing prices despite more than 20 prior measures. They warn that focusing solely on controlling Seoul housing prices and prematurely raising the issue of relocating the administrative capital has backfired, resulting in a sharp rise in Sejong housing prices, and even if the discussion is later abandoned, the public will bear the burden of the rapidly increased housing prices.

Sejong housing prices were already on the rise due to decreased supply within Sejong and increased demand from population inflow. The administrative capital relocation issue added fuel to the fire, further accelerating the price increase. Professor Kwon Dae-jung of Myongji University’s Department of Real Estate said, "Since housing prices in the metropolitan area are rising, the relocation of the administrative capital was brought up as a way to divert attention, but it is like wearing winter clothes in summer?an illogical story," adding, "As a result, it only raised Sejong housing prices."