Surge in Gangnam Area Listings Due to Tax and Loan Regulations... Seocho-gu Hits 26.6% Peak
Homeless Tired of Jeonse Crisis Flock to Affordable Apartments in Nodo-gang and Jungnang-gu
Paju, Avoiding Regulation Zones, Sees Sharp Rise in House Prices from Outsider Speculation
[Asia Economy Reporters Donghyun Choi, Chunhee Lee] The housing market is plunging into chaos due to the government's high-intensity overlapping regulations. In Seoul's Gangnam area, tightly bound by increased holding and transaction taxes and loan restrictions, the transaction cliff is deepening, leading to an accumulation of listings and price declines in some complexes. Meanwhile, in the outskirts of Seoul, tenants are expanding their purchases of mid- to low-priced homes to escape the jeonse (long-term lease) crisis. Amid this, in places like Paju, Gyeonggi Province, which avoided government regulation zone designation, house prices are soaring as outside investors flock in.
According to real estate big data company Asil on the 24th, the number of listings has sharply increased recently in the Gangnam 3 districts?Gangnam, Seocho, and Songpa?where high-priced apartments are concentrated. Among Seoul's 25 autonomous districts, Seocho-gu showed the highest increase rate in listings over the past two months. As of this day, the number of listings was 4,286, a 26.6% increase from 3,384 two months ago. Following were Gangnam-gu with a 21% increase (3,565 to 4,316 listings) and Songpa-gu with a 20% increase (2,428 to 2,915 listings), making all top three districts located in Gangnam. Analysts suggest that homeowners, unable to bear the triple tax burdens such as comprehensive real estate tax and reconstruction excess profit charges, have started disposing of their homes. However, due to loan restrictions and land transaction permit zone designations, buying demand has vanished, pushing Gangnam into a transaction cliff.
In fact, in the reconstruction-promoting complex Sinbanpo 10th in Jamwon-dong, Seocho-gu, listings increased 2.7 times from 30 to 82 in the past two months. Banpo Jugong 1st complex in Seocho-dong, where reconstruction excess profit charges of around 400 million KRW per member were notified, also saw listings double from 142 to 284 during the same period. Complexes with no transactions at all are appearing one after another. In Daechi-dong, Gangnam-gu, Eunma Apartment had no transactions last month and this month, and Jugong 5th complex in Jamsil-dong, Songpa-gu, had only two transactions last month. A representative from real estate agency A in Daechi-dong lamented, "With transactions disappearing, even paying assistant brokers' wages is tough, so these days we only operate in the afternoons."
On the other hand, in Seoul's outskirts, transactions are increasing as tenants continue buying amid the jeonse crisis triggered by the two lease laws: the right to request contract renewal and the rent ceiling system. According to Seoul Real Estate Information Plaza statistics, apartment transactions in Seoul in October were 4,124, a 9.4% increase from 3,769 in the previous month. This is a rebound after three months. Notably, the increase rates in outer districts were prominent: Gangbuk-gu 52.6%, Dobong-gu 42.9%, Jungnang-gu 38.8%, and Nowon-gu 21.9%. Considering the 30-day contract reporting deadline, transaction volumes in these areas are expected to rise further in October. Kwon Il, research team leader at Real Estate Info, said, "As house prices rise and the jeonse crisis worsens, mainly people in their 30s are actively purchasing apartments."
While Seoul's housing market is divided, a strong speculative wave is blowing in Paju, Gyeonggi Province. This is a balloon effect following the government's designation of Gimpo City, Gyeonggi Province, where house prices surged, as a regulated area. On the 11th, an 84㎡ unit (exclusive area) in Hanbit Village 5 complex Castle & Cantavil in Yadang-dong, Paju, was sold for 575 million KRW. This price rose by 66 million KRW compared to the actual transaction price of 509 million KRW last month. In Mokdong-dong, Unjeong New Town Central Prugio 74㎡ was sold for 639 million KRW on the 6th, rose to 688 million KRW on the 16th, and as of the 23rd, the listed asking price on Naver Real Estate soared to 760 million KRW. A representative from real estate agency A in Unjeong-dong explained, "Right after Gimpo City was designated as a regulated area, inquiries from outside buyers about apartments in Unjeong New Town surged," adding, "As prices rise sharply, homeowners are withdrawing listings and raising asking prices."
Yang Ji-young, director of Yang Ji-young R&C Research Institute, said, "As jeonse prices soar, more young people are buying homes even through gap investment," and predicted, "Since the implementation of the two lease laws caused jeonse prices to rise, sales demand is flocking to undervalued outskirts areas, and this situation is expected to continue for the time being."
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