"Highest Since Pyeongchang Winter Olympics Boom"…Hot Gangwon-do Housing Prices

Apartment Prices in Gangwon-do Continue Steady Rise
Largest Increase Since 2011 Olympic Host City Confirmation
Positive Factors Include Non-Regulated Areas and Improved Transportation
Significant Increase in Non-Local Buyers Compared to Last Year
However, Caution Advised on Follow-Up Purchases... "Growth Rate Will Slow"

[Asia Economy Reporter Moon Jiwon] The real estate market in Gangwon Province is heating up. Although the rise is not as steep as in Seoul and the metropolitan area, steady buying demand is increasing, creating an atmosphere where housing prices continue to climb. Within Gangwon Province, there is even talk of the largest real estate boom in 10 years since Pyeongchang was confirmed as the host city for the Winter Olympics in 2011. Amid a nationwide overheated real estate market, the reduction in unsold units and a significant increase in investment from outsiders compared to previous years have contributed to the upward trend in Gangwon housing prices.

Highest Since Pyeongchang Winter Olympics Boom... End of a Long Downturn?

According to the Korea Real Estate Board on the 19th, apartment prices in the Gangwon area rose by an average of 0.15% last week, expanding the increase from the previous week (0.13%). During the same period, price increases in Seoul, the metropolitan area, and other provinces all slowed, but apartments in Gangwon have steadily increased their rate of growth since last month. The cumulative increase from the beginning of this year through June was 4.40%, surpassing Seoul’s average increase of 3.18% by 1.22 percentage points. This is a complete turnaround from the -4.85% and -6.59% recorded in 2018 and 2019, respectively. Compared to last year’s annual increase of just 2.16%, this upward trend is notable.

In the private KB Housing Price Trend Survey, Gangwon apartment prices rose 0.61% this week, ranking second among metropolitan cities and provinces nationwide, just behind Jeju Island. The recent rise in Gangwon is the highest since July 2011, when Pyeongchang in Gangwon was confirmed as the host city for the 2018 Winter Olympics at the International Olympic Committee (IOC) General Assembly held in Durban, South Africa. At that time, Gangwon apartment prices surged 19.19% within a year. The perception that housing prices were undervalued, combined with transportation network expansion and Olympic-related benefits, attracted strong buying demand.

Buying Demand Concentrates in Gangwon... Outsider Purchases Soar

Recent increases in Gangwon apartment prices are analyzed to be influenced by a rise in purchases by outsiders. In fact, the proportion of real estate purchases by outsiders in Gangwon has increased by about 3 to 8 percentage points compared to the same period last year. According to the Korea Real Estate Board’s monthly analysis by buyer residence, the share of outsider purchases of Gangwon apartments was in the mid-20% range from January to May last year but rose to 37% (in January and May) this year.

Steady price increases continue throughout Gangwon, including Wonju, Chuncheon, Gangneung, and Sokcho. For example, a 114㎡ unit (exclusive area) in ePyeonhansesang Chuncheon Hansup City in Toegye-dong, Chuncheon, was traded for 815 million KRW in early last month, up 35 million KRW from 780 million KRW in February. In Wonju’s Jijeong-myeon, Lotte Castle Gold Park Phase 1 units around 84㎡, which were mainly traded in the mid to high 200 million KRW range early last year, now have actual transaction prices between 405 million and 435 million KRW.

As outsider purchases increase, unsold apartments in Gangwon are also rapidly decreasing. According to the Ministry of Land, Infrastructure and Transport, as of the end of May, unsold housing units in Gangwon numbered 1,605, about half of the 3,115 units recorded in December last year. In Wonju, the unsold housing management area managed by the Housing and Urban Guarantee Corporation (HUG) was lifted at the end of last month.

Caution Needed Against Reckless Chase Buying

Experts explain that buying demand is flowing into Gangwon, where transportation conditions are continuously improving and there are advantages as a non-regulated area, amid the significant rise in apartment prices in Seoul and the metropolitan area. They also analyze that housing purchases by middle-aged and older adults have increased due to growing demand for retirement residences and second homes. However, since local areas have weak growth engines, they advise caution against excessive investment.

Kwon Il, head of the research team at Real Estate Info, said, "With the expansion of the railway network and steady sales of new units, psychological interest in the Gangwon area seems to have increased. However, if other investment alternatives emerge, outsider demand is likely to withdraw first from local areas like Gangwon. While the upward trend is expected to continue for the time being, it will gradually slow down."