Panic Buying Doubles Among 2030s... 25-Pyeong Homes on Seoul Outskirts Reach 1 Billion Won

30s and Under in Seoul Bought 29,287 Apartments This Year, Twice Last Year
Geumcheon-gu Geumcheon Lotte Castle Gold Park 1st Phase 59㎡ Near 1 Billion KRW
Gangseo Gayang-dong, Seongbuk Gireum New Town 59㎡ Surpasses 1 Billion KRW
New Lease Law Sparks Jeonse Crisis, Fuels Apartment Prices

[Image source=Yonhap News]

[Asia Economy Reporter Lim Onyu] This year, as 'panic buying' among young people has spread, apartment purchases in Seoul by those aged 30 and under have doubled compared to last year. Panic buying, which peaked in June and July and subsided in August and September, is showing signs of re-emerging recently due to the impact of the ongoing jeonse (long-term lease) crisis.

According to the Korea Real Estate Board on the 29th, the number of apartment sales in Seoul from January to October this year (based on the reporting date) was 80,295, which is 1.7 times the 46,662 transactions during the same period last year. Apartment purchases in Seoul increased across all age groups compared to last year. The age group with the highest growth rate was those aged 20 and under (teens and twenties), with 2,933 transactions this year, which is 117% (2.2 times) of last year's 1,352 transactions. This was followed by those in their 30s (96%), 40s (69%), 50s and 60s (60%), and 70 and above (51%).

The number of apartment purchases in Seoul by those aged 30 and under increased to 29,287 this year, doubling last year's 14,809. The proportion of apartment purchases by those aged 30 and under among total Seoul apartment transactions also rose from 31.7% last year to 36.5% this year. The share of apartment purchases by this age group first exceeded 40% in August (40.4%) and continued to rise, reaching 43.6% last month.

The increase in apartment purchases by those aged 30 and under appears to be driven by anxiety that it will be difficult to own a home later due to rapidly rising housing prices. Additionally, the severe jeonse shortage, exacerbated by the implementation of new tenant protection laws such as the rent ceiling system and the right to request contract renewal, is also a factor stimulating panic buying.

Park Wongap, Senior Real Estate Specialist at KB Kookmin Bank, said, "Those aged 30 and under are gripped by anxiety that if they do not get on the current rising housing price train, they will remain homeless forever, even though it feels like they are buying at the peak. The market is clearly overheated, but it is a sad situation where people are forced to buy homes due to the jeonse crisis."

Panic buying by people in their 20s and 30s is further driving up housing prices. Even small apartments around 25 pyeong (approximately 82.6 square meters) in the outskirts of Seoul are surpassing the 1 billion KRW (approximately 1 million USD) mark. According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system, a 59㎡ (exclusive area) unit at Geumcheon Lotte Castle Gold Park 1st in Doksan-dong, Geumcheon-gu, Seoul, changed hands for 973 million KRW on the 3rd of this month. The 59㎡ unit is roughly a 25-pyeong-sized small apartment, mainly demanded by 2-3 person households. While this apartment mostly traded in the 800 million KRW range in the first half of the year, it surpassed 900 million KRW in August and has now surged close to 1 billion KRW in actual transaction prices.

In the Gangseo-gu area, cases of apartments of similar size exceeding 1 billion KRW in actual transaction prices are also increasing. A 59㎡ unit at Gangseo Hangang Xi in Gayang-dong was sold for 1.06 billion KRW on the 15th of last month, and a unit at Gangseo Hillstate in Hwagok-dong was traded for 1.055 billion KRW on the 9th of last month. A similar-sized unit at Hanwha Dream Green 1st in Yeomchang-dong was reported at 979 million KRW on the 24th of last month, with asking prices already soaring to the 1.1 billion KRW range.

Small apartment prices are also soaring in areas with good access to downtown or Gangnam, such as Gireum New Town in Seongbuk-gu and Sindorim-dong in Guro-gu. A 59㎡ unit at Raemian in Gireum New Town 8th complex was contracted for 1 billion KRW on the 19th of last month, the first in Seongbuk-gu to reach this price, and a 60㎡ unit at Dong-A 3rd in Sindorim was traded for 975 million KRW earlier this month, with current asking prices rising to as high as 1.15 billion KRW.

Actual apartment transactions in Seoul rebounded to 4,187 units last month after three months, with listings in the outskirts rapidly depleting. According to real estate big data company Apartment Real Transaction Price, the districts with the highest rate of listing decreases in Seoul over the past month were Gangseo-gu (-5.8%) and Geumcheon-gu (-2.5%). Ham Youngjin, head of Zigbang Big Data Lab, analyzed, "There is an underlying anxiety that jeonse prices will rise further due to fewer new housing completions next year compared to this year, and as housing prices maintain a strong sideways trend, people are anxiously buying apartments even in the outskirts."

The increased difficulty of winning new housing lotteries is also driving up small apartment prices. Experts analyze that young people with few dependents or short periods of being homeless are inevitably pushed into the general sales market.