Apartment Sale Price Increase Rate 0.49%... 4 Weeks of Consecutive High Growth
Compared to Slowed Increase in Seoul and Gyeonggi
"Can't Buy a Home in Seoul"... Demand Rises for Mid-Low Priced Listings
[Asia Economy Reporter Ryu Tae-min] “Recently, the number of customers looking for apartments has significantly increased. Since it seems difficult to own a home in Seoul, they are moving to Incheon.” (A representative from a real estate agency in Songdo, Incheon)
Last year, as the real estate frenzy continued in major metropolitan areas including Seoul, Incheon, which had been relatively overlooked, has recently shown an upward trend. This appears to be because buyers, burdened by skyrocketing housing prices, are flocking to Incheon in search of relatively affordable properties.
According to the Korea Real Estate Board on the 12th, the weekly apartment price increase rate in Incheon for the first week of April (as of the 5th) recorded 0.49%, marking the highest level in about a year since March 16 last year (0.53%). Incheon apartment prices have increased for four consecutive weeks, starting from 0.36% on March 15, then 0.46% (March 22), 0.48% (March 29), and 0.49% (April 5), with the rate of increase growing each week.
On the other hand, apartment prices in Seoul and Gyeonggi Province appear to be slowing down. Due to the concretization of the 2.4 measures and continued weakening of buying demand and cautious sentiment, the rate of increase in Seoul (0.06% → 0.05%) and Gyeonggi (0.36% → 0.34%) has decelerated during the same period.
Private statistics also highlight Incheon's apartment price rise compared to Seoul and Gyeonggi. According to KB Live On, Incheon's apartment price increase rate has continued to rise since recording 0.22% as of January 4, reaching as high as 0.82% on March 22. During the same period, Seoul's housing price increase rate was only 0.3%.
In Songdo International City, Yeonsu-gu, Incheon, which led the upward trend with a 3.27% increase in one month, mid-sized apartments priced over 1 billion KRW are appearing one after another. According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system, the ‘Songdo Central Park Prugio’ 84㎡ (exclusive area) was traded for 1.135 billion KRW in January, marking the highest price for the same size in Songdo. Nearby ‘Songdo The Sharp First Park’ and ‘Songdo The Sharp Master View’ 84㎡ apartments were also traded for 1.05 billion KRW each last month, breaking the ‘1 billion ceiling.’ So far this year, there have been a total of 12 mid-sized apartment transactions exceeding 1 billion KRW in Songdo.
Auction Fever Heats Up... Sold Above Appraised Value
As apartment prices continue to rise, buyers are flocking to court auctions where properties can be purchased below market price. According to the ‘March Auction Trend Report’ by Gigi Auction, a court auction specialist company, the winning bid rate for Incheon apartments was 103.8%, marking the highest level in about a year since April last year (103.9%). The winning bid rate refers to the ratio of the winning bid price to the appraised value; for example, an apartment appraised at 100 million KRW was sold for 103.8 million KRW.
This steep rise is due to the demand for ‘owning a home’ concentrating in Incheon. Last year, as Seoul apartment prices soared and the jeonse (long-term deposit lease) crisis continued, real buyers seemed to turn their attention to Incheon, where housing prices are relatively affordable. In fact, among 4,926 apartment transactions in Incheon in February, 1,788 (36.3%) were purchased by outsiders.
Repeated transportation benefits within Incheon also seem to have an impact. Incheon is part of the GTX (Greater Seoul Metropolitan Express Railway) B and D lines, which will improve transportation conditions in the long term. GTX-B is a line that runs from Songdo, Incheon, through Yeouido, Seoul Station, Cheongnyangni, and extends to Maseok in Namyangju. GTX-D is not yet finalized, but both routes proposed by Gyeonggi Province (Geomdan to Hanam) and Incheon (Incheon Airport to Bucheon) include Incheon.
Ham Young-jin, head of the Zigbang Big Data Lab, explained, "Incheon has many relatively affordable mid-to-low priced apartments compared to Seoul, so demand has recently surged. Expectations for improvements in various transportation environments, including not only GTX but also the extension of Line 7, the Second Gyeongin Line, and the Wolpan Line, have increased."
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