Oh Se-hoon's 'Two-Track' Policy, Market Responds "Let's Wait and See for Now"

Reconstruction Prices Soar but Transactions Plummet
Only 9 Deals After Election
Listings Increase in Jamsil5 and Others

City Investigates Unusual High-Price Trades
Housing Construction Headquarters Expanded to Boost Supply and Block Speculation

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hye-min] The real estate policy under Mayor Oh Se-hoon is solidifying in a direction that combines supply and regulation. While opening the supply channel, consistent signals are being sent to prevent irrational transactions and overheating. Markets that expected immediate deregulation right after the Seoul mayoral by-election are shifting to a "wait and see" stance. Transactions in reconstruction complexes have actually tightened since Mayor Oh's election.

◆ Asking prices rose... but only 9 reconstruction transactions after election = On the 19th, Asia Economy analyzed the Ministry of Land, Infrastructure and Transport's actual transaction disclosure system and found that among 129 reported apartment sales in Seoul from the 8th, when Mayor Oh took office, to that day, only 9 were in reconstruction promotion complexes.

In Gangnam-gu, Apgujeong-dong Hyundai 4th Complex, a 117.9㎡ (exclusive area) unit was traded on the 13th for 4.175 billion KRW, and in Seocho-gu, Jamwon-dong Sinbanpo 18th Complex, an 80.4㎡ unit signed a contract on the 9th for 2.48 billion KRW. In Yangcheon-gu, Mok-dong New Town 7th Complex, a 66.6㎡ unit was also sold on the same day for 1.76 billion KRW. Additionally, in Nowon-gu, Sanggye-dong Jugong 16th Complex, a 59㎡ unit changed hands for 620 million KRW.

Although the real estate transaction reporting deadline is within 30 days and the situation may change, field experts explain that the high asking prices in reconstruction complexes have caused transaction stagnation. A representative from a real estate agency in Mok-dong said, "Because the reconstruction market is so noisy, asking prices are 50 million to 100 million KRW or more above actual transaction prices," adding, "Most buyers look for urgent sales with lower asking prices, but even urgent sales exceed the highest recorded prices, so transactions are rare." A representative from a real estate agency in Apgujeong-dong also said, "Prices have already surged ahead of the establishment of the association, and asking prices have risen further since Mayor Oh took office," adding, "There are many inquiries, but because these are ultra-high-priced complexes, contracts are not proceeding smoothly."

Listings in major reconstruction promotion complexes, including Gangnam area, are also accumulating. According to the real estate big data company Apartment Actual Transaction Price, the current listings in Songpa-gu, Jamsil-dong Jugong 5th Complex total 155 units, an increase of 11 from 144 units ten days ago. In Seocho-gu, Jamwon-dong Sinbanpo 4th Complex, listings rose from 50 to 65 units. In Nowon-gu, Sanggye-dong Jugong 3rd Complex, a mid-to-low priced reconstruction complex, 14 units accumulated during the same period.

◆ Oh Se-hoon starts supply cautiously amid ‘prudence’ = This cautious stance is because the rapid rise in asking prices in major complexes has increased buyers’ burden. Mayor Oh’s ‘prudent’ approach to curb housing price overheating after his election is also one of the reasons buyers hesitate.

Mayor Oh is expected to focus on ‘regulation’ policies that minimize housing price stimulation for the time being. He has already ordered investigations into ‘abnormal transactions’ in real estate and designated land transaction permission zones. On the 16th, at a briefing of the Seoul Housing and Architecture Headquarters, Mayor Oh specifically mentioned the case of Hyundai 7th Complex in Apgujeong, which recently traded for 8 billion KRW (245.2㎡), saying, "We will not tolerate transactions that destabilize the real estate market." Seoul City is expected to soon announce measures to prevent real estate market disturbances, such as additional designation of land transaction permission zones centered on major reconstruction complexes.

However, preparations to expand supply are also being made one by one. First, a plan to reorganize real estate-related organizations around the Housing and Architecture Headquarters, which is the supply department, is under consideration. Currently, the city’s real estate supply-related work is overseen by the Housing and Architecture Headquarters, while the Urban Regeneration Office’s Urban Activation Division and the Urban Planning Bureau’s Urban Management Division handle individual tasks. Mayor Oh is likely to reassign these under the Housing and Architecture Headquarters. The 2040 Seoul Plan to be released at the end of the year is expected to include lifting the 35-floor restriction, and the 2030 Basic Plan for Urban and Residential Environment is expected to delete the residential maintenance index. Both are campaign pledges.