Jamsil Jugong 5 Complex 82.61㎡ Sets New Record Price in 7 Months
"Not Selling Even at 2.5 Billion Won, Listings Locked"
Opposition Candidates Na Kyung-won, Ahn Cheol-soo, Oh Se-hoon "Rapid Reconstruction Promotion"
Ruling Party Candidate Woo Sang-ho "Not the Answer to Reconstruction but Will Review Flexibly"
[Asia Economy Reporter Onyu Lim] Ahead of the April Seoul mayoral by-election, the prices of reconstruction apartments are soaring amid a flood of deregulation pledges. In particular, there is a buying frenzy in the mammoth complexes in the Gangnam area, where projects were delayed during former Seoul Mayor Park Won-soon's administration to stabilize real estate prices.
According to real estate agencies in Songpa-gu, Seoul, and the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system on the 24th, the 82.61㎡ (exclusive area) unit in Jamsil Jugong Complex 5 set new record prices at two-day intervals. It was traded at 2.466 billion KRW on the 7th and then changed hands at 2.481 billion KRW on the 9th, 15 million KRW higher.
This is a record high after seven months. Jamsil Jugong Complex 5 had its price growth suppressed due to conflicts with the Seoul city government, a ban on mortgage loans for apartments exceeding 1.5 billion KRW, and the land transaction permit system, a triple burden. The price, which was 2.4 billion KRW in December 2019, fluctuated between 2.1 billion and 2.3 billion KRW before barely recovering to 2.43 billion KRW in June last year.
However, the atmosphere has recently changed dramatically. A representative from real estate agency A in Jamsil-dong (hereafter referred to as the agent) said, "There are almost no listings," adding, "Currently, there is one unit of the relevant size with a less favorable orientation, but even that is not willing to sell for less than 2.5 billion KRW."
The rise in prices of Jamsil Jugong Complex 5 apartments is explained by local real estate offices as being driven by deregulation pledges from both opposition and ruling party mayoral candidates ahead of the by-election. For example, former lawmaker Na Kyung-won of the People Power Party pledged to "streamline various reviews for rapid reconstruction," and Ahn Cheol-soo, leader of the People’s Party, also advocates deregulation such as floor area ratio relaxation for redevelopment and reconstruction. Even Woo Sang-ho of the Democratic Party, while stating "deregulation of reconstruction is not the answer to real estate stabilization," has shown a progressive stance by saying he will "consider reconstruction promotion more flexibly."
Besides Jamsil Jugong Complex 5, the upward trend is intensifying in representative reconstruction complexes such as Gaepo Jugong Complexes 5, 6, and 7 in Gangnam-gu, which recently avoided the two-year residency rule by applying for association establishment, and Apgujeong Hyundai. Recently, a 53.98㎡ unit in Gaepo Jugong Complex 5 was contracted for the first time at 2 billion KRW, and a 53.46㎡ unit in Gaepo Jugong Complex 7 also entered the 1.8 billion KRW range. The 183㎡ unit in Apgujeong Shinhyundai 11th complex was traded at 5.2 billion KRW, exceeding the previous high by 300 million KRW. Despite its large size, the price amounts to 85 million KRW per pyeong.
The changed atmosphere is also reflected in indicators. According to the Korea Real Estate Board’s weekly trend for the first week of January, apartment prices in Seoul rose by 0.09%, the largest increase since the second week of July following the announcement of the July 10 measures last year. The Real Estate Board explained, "Prices rose centered on complexes with high reconstruction expectations such as Jamsil-dong, Apgujeong-dong, and Banpo-dong."
However, it is uncertain whether the pledges will materialize and bring effects commensurate with the rise in reconstruction apartment prices. Since the remaining term is only one year, it is pointed out that it will be difficult to even break ground during the term regardless of who is elected. Moreover, the current top candidate in approval ratings is Park Young-sun, Minister of SMEs and Startups, who follows the government’s reconstruction regulation policy.
Ham Young-jin, head of the Zigbang Big Data Lab, said, "Depending on who is elected, reconstruction regulations and floor restrictions may change, so the prices of landmark reconstruction complexes in Seoul continue to rise," adding, "However, since the term is only one year and the timing of unification is undecided, the uncertainty of reconstruction complexes remains high."
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