"House Prices Follow Paju Trend"... Balloon Effect Intensifies in Paju Avoiding Regulations

Non-Regulated Area in the Capital Region 'Paju'... Buying Demand Concentrated
Up 1.38% This Week... Largest Increase Ever
Criticism of 'Late Regulation' as Adjustment Area Designation Considered

[Asia Economy Reporter Moon Jiwon] "I got it in Paju for 235 million won (2.35 billion KRW)." When this post was uploaded on a real estate-related social networking service (SNS) on the 3rd, congratulatory comments poured in. The purchased apartment is the Soejae Maeul Terrance Jugong Complex 5 in Geumchon-dong, Paju, Gyeonggi Province, with an exclusive area of 59.72㎡. Until recently, this area mainly traded in the high 100 million won range, but after Gimpo was designated as a regulated area on the 20th of last month, the asking price surged to 275 million won. An industry insider explained, "235 million won is a significantly increased price compared to early last month, but considering the recent trend, it is still a reasonable price."

According to the real estate industry on the 4th, the housing market in the Paju area, the only non-regulated area left in the Seoul metropolitan area, is showing unusual activity. Since Gimpo was newly designated as a regulated area on the 20th of last month, buyer sentiment in the metropolitan area has concentrated on Paju. Additionally, with transportation benefits such as the Seoul Metropolitan Area Express Train (GTX)-A line and the extension of Subway Line 3, both scheduled for completion in 2023, not only actual demand but also investment demand is pouring in.

Among the leading apartments in Paju, the Dongpae-dong Unjeong New Town I-Park with 109.99㎡ was traded for 894.74 million won on the 21st of last month. The 84.91㎡ unit had already set a new record price of 833 million won in October. This is an increase of about 80 million won in two months. The 84㎡ Central Prugio in Mokdong-dong Unjeong New Town was traded for 865 million won on the 14th of last month, and the Paju Hillstate Unjeong 84.96㎡ was traded for 760 million won last month. All these prices are unusually high for Paju.

The representative of Unjeong New Town A Real Estate Agency said, "Recently, many people come to inquire about purchases even from Seoul," adding, "Six to seven people come to view houses daily." An investor said, "The atmosphere is good not only in Unjeong New Town but also in Geumneung-dong and Gyoha-dong," adding, "House prices are soaring in Paju."

According to a survey by the Korea Real Estate Board, apartment prices in Paju rose by 1.38% compared to the previous week, setting a new record for the highest weekly increase. Since October 19th, when prices began to rebound from a decline, the increase has been growing for five consecutive weeks.

According to the real estate listing application 'Asil (Apartment Real Transaction Price)', among the top 10 apartment complexes with the most transactions in Gyeonggi Province since the 20th of last month, four are in Paju. The Saekkot Maeul Terrance Complex 1 in Geumchon-dong, Paju, recorded 26 sales contracts in about two weeks.

(Photo by Yonhap News)

Inside and outside the industry, there is an analysis that Paju may soon be designated as a regulated area. This is because the Ministry of Land, Infrastructure and Transport recently stated that it would "closely monitor non-regulated areas where balloon effects are concentrated and immediately consider designating regulated areas if overheating concerns intensify." Paju has been considered a key area since the June 17th measures, but the average sale price has fluctuated between cold and hot, avoiding regulations several times.

Among actual buyers, anxiety is growing as rumors spread that Paju may be designated as a regulated area. Due to the sharply rising prices, innocent actual buyers may suffer. A Paju resident said, "I have been looking for an apartment for actual residence recently, but if Paju is designated as a regulated area, company loans will not be available," adding, "Prices have risen too much, so I cannot delay the purchase any longer, but I feel uneasy."

However, the Ministry of Land, Infrastructure and Transport seems to be deliberating on whether to designate Paju as a regulated area. When Gimpo and others were designated as regulated areas on the 20th of last month, there were many analyses that balloon effects would concentrate in Paju, but it was not designated at that time. It is difficult to avoid criticism that the area was only regulated after prices rose. If Paju is regulated, there are concerns that the balloon effect may shift to nearby areas such as Ilsan and ultimately stimulate Seoul housing prices again.