Busanjin-gu Mixed-Use Complex 84㎡ Asking Price Over 400 Million Won... Growing Bubble

Despite Additional Regulation Warnings,
'Hundreds of Millions Rise, Tens of Millions Fall'
Learning Effect Drives Housing Price Increase
Cheonan and Changwon Also Maintain Upward Trend
Pinpoint Regulations Criticized for Stimulating Real Estate Market
"Investment Demand Seeks Next Balloon"

[Asia Economy Reporter Onyu Lim] Recently, the asking price for Samhan Golden View Central Park, a residential-commercial complex apartment in Beomjeon-dong, Busanjin-gu, Busan, has surged by more than 400 million KRW. This occurred immediately after Haeundae, Suyeong, Dongnae, Yeonje, and Nam-gu were designated as regulated areas. On the 12th of last month, an 84㎡ (exclusive area) apartment on the 31st floor was traded for 850 million KRW, but currently, the asking prices for units on the 32nd and 42nd floors reach 1.3 billion KRW. A representative from real estate agency A in the area said, "At the beginning of the year, this apartment was traded in the 500 million KRW range," adding, "Although the high asking prices make actual transactions unlikely, many homeowners are witnessing a balloon effect and have high expectations for rising home prices."

Since the government designated the overheated housing markets in Gimpo, five districts in Busan, and Suseong-gu in Daegu as regulated areas, the balloon effect has expanded not only in the metropolitan area but also across various local regions. Despite the government's warning of possible additional regulation designations, the learned behavior of 'prices rising by hundreds of millions and then dropping by tens of millions' seems to be driving housing price increases. Critics point out that the clumsy pinpoint regulations that 'press down when prices rise' are instead stimulating the real estate market.

According to frontline real estate brokerage industry sources on the 2nd, there have been numerous cases of rapid apartment price increases as buying demand spreads in local areas such as Busan, Ulsan, Changwon in Gyeongnam, and Cheonan in Chungnam. Most of these are non-regulated areas that were excluded from the government's designation on the 19th of last month.

In particular, the housing price rise in Busanjin-gu, Busan, is steep. Busanjin-gu is adjacent to the regulated areas of Dongnae, Yeonje, Suyeong, and Nam-gu. According to the weekly housing market trend released by KB Live On on the 27th of last month, Busanjin-gu recorded an apartment price increase rate of 2.42%, the highest nationwide among city and county districts during that period. For example, a 125㎡ unit in The Sharp Central Star in Bujeon-dong, Busanjin-gu, was sold for 800 million KRW on the 20th of last month, right after the regulation announcement. This apartment was traded for 599 million KRW in October, marking an increase of over 200 million KRW in just one month. The prices of apartment pre-sale rights in the area are also rising sharply. An 84㎡ unit in Raemian Urban Park in Yeonji-dong was traded for 890 million KRW on the day of the regulation announcement, 150 million KRW higher than the previous price.

The housing price rise continues in Cheonan and Changwon, where the government is considering designating regulated areas. The 84㎡ unit in Hoban Summit Place Center City in Buldang-dong, known as the 'Gangnam of Cheonan,' changed hands at a record high of 720 million KRW on the 19th of last month. This is 30 million KRW higher than the highest price of 690 million KRW in October. Currently, the asking price for mid-level units in this apartment is as high as 1.1 billion KRW.

In Changwon, a 119㎡ unit in Yongji The Sharp Lake Park in Yongho-dong, Uichang-gu, was traded at a record high of 1.45 billion KRW on the 25th of last month. This is a sharp increase of 420 million KRW compared to the previous record high of 1.03 billion KRW in May. Currently, a smaller 101㎡ mid-level unit in this complex is listed at 1.4 billion KRW.

In the Changwon area, buying demand has also surged in older complexes such as Eun-A in Sinwol-dong, Uichang-gu, and Banlim Lucky in Bansong-dong, Seongsan-gu, drawing attention. According to nearby real estate agencies, apartments with official prices below 100 million KRW attract buyers because multi-homeowners only pay a 1% acquisition tax even if they purchase them. A 79㎡ unit in Eun-A was sold for 700 million KRW on the 20th of last month, breaking the previous highest price of 600 million KRW within 20 days. A representative from real estate agency B nearby said, "Although buying demand has calmed compared to October due to the possibility of regulation designation, transactions are still occurring," adding, "There is a widespread expectation that even if regulations are implemented, prices will not fall from their increased levels."

Moreover, in the Changwon area, there is already a sense of anticipating other regions that might experience a balloon effect. A representative area is Masanhwoin-gu, the former Masan region. It is expected that if Uichang-gu and Seongsan-gu, where housing prices are rising steeply, are designated as regulated areas, investment demand will shift to this area. A representative from real estate agency B in Changwon said, "I have heard that many outside investors have already entered Masanhwoin-gu, purchasing pre-sale rights and homes with official prices below 100 million KRW." Because of this, Gyeongnam is also considering designating these areas as preliminary regulated areas if abnormal signs are detected.