Searching for 'Apartments Under 600 Million' in Incheon... Both Sales and Auction Markets on the Rise

Highest Nationwide Price Increase Rate in Early July and Year-to-Date
Demand for Home Ownership Concentrated in Affordable Complexes
June Auction Average Winning Bid Rate at 108.1%, 'All-Time High'

Apartment complexes in the Nowon-gu area of Seoul. Apartment prices in 'Nodogang' (Nowon, Dobong, Gangbuk districts) in Seoul have risen the most over the past year.
(Photo by Yonhap News)

[Asia Economy Reporter Ryu Tae-min] Apartment prices in Incheon, which had been left out of the rapid price surge in the Seoul and Gyeonggi areas last year, have recently been rising sharply. As housing prices soared to unprecedented levels, buyers feeling the burden appear to have moved to relatively cheaper properties.

According to the Korea Real Estate Board on the 12th, the weekly apartment price increase rate in Incheon for the first week of July (as of the 5th) was recorded at 0.46%. This is the highest figure among the 17 cities and provinces nationwide. In the last week of the previous month, it rose by 0.57%, marking the highest weekly figure in 9 years and 1 month since statistics began to be compiled.

From January this year to last week, Incheon’s cumulative apartment price increase rate also ranked first among metropolitan cities and provinces nationwide at 12.35%. Although it is based on the first half of the year, this is nearly double last year’s total cumulative increase rate of 6.33%. This contrasts with 2019, when apartment prices recorded negative growth.

The rise in Incheon apartment prices is also prominent in private statistics. According to KB Live Real Estate, as of the 5th, Incheon’s apartment price increase rate was 0.54%, the highest among cities and provinces nationwide.

The delayed rise in Incheon’s housing prices is analyzed to be due to demand for home ownership concentrating on relatively affordable complexes. Recently, as housing prices in major areas of Seoul and Gyeonggi soared to unprecedented levels, causing a shortage of mid- to low-priced apartments, demand moved to cheaper properties. According to a recent survey by Real Estate 114, one out of every three mid- to low-priced apartments priced below 600 million KRW in Seoul disappeared in the first half of this year. This is seen as an effect of the long-term rise in Seoul apartment prices, which also pushed up prices of small apartments. The price of 600 million KRW or less is the standard for mid- to low-priced housing, which applies fixed-rate mortgage loans like the Bogeumjari Loan with interest rates in the 2% range or preferential loan-to-value (LTV) ratios for non-homeowners with actual housing demand.

As apartment prices continue to rise, demand is also pouring into court auctions. According to Gigi Auction, a court auction specialist company, the winning bid rate compared to the appraised value for Incheon apartments last month was 108.1%. This is the highest figure in Incheon since statistics began to be compiled in 2001. The average winning bid rate for Incheon apartments has exceeded 100% for five consecutive months since February this year.

The 59㎡ unit at Hoban Verdiom Yeongmu Yedam in Cheongna-dong, Seo-gu, Incheon, was auctioned on the 29th of last month for 484,199,999 KRW. This is more than 1.5 times the appraised value of 317 million KRW. There were 27 bidders.

Seo Jin-hyung, president of the Korea Real Estate Society (professor at Gyeongin Women’s University), explained, "Incheon has recently seen increased expectations as redevelopment and reconstruction have been activated mainly in the old downtown area. In addition, with the expansion of transportation networks improving the residential environment, demand is concentrating on mid- to low-priced complexes with fewer loan restrictions."