Villa Prices Rise Mainly in Old Residential Areas of Gangbuk District
Cumulative Increase Rate of Multi-family Housing Prices in Seoul This Year at 4.73%
[Asia Economy Reporter Lim On-yu] The public redevelopment contest under Mayor Oh Se-hoon's plan, centered on the abolition of the Residential Maintenance Index System and the introduction of Rapid Integrated Planning, has been in full swing since the 23rd, stirring up old residential areas in Seoul. With 25 candidate sites expected to be selected in December, there is already an overheating trend in the villa market, especially in the Gangbuk area, fueled by redevelopment expectations. The asking prices in some prime candidate areas near subway stations have already risen by tens of millions of won or more.
◆ Full-scale selection of 25 districts within the year = The "Housing Redevelopment Project Candidate Site Contest," which began on the 23rd, is the first application of the six major deregulation measures for revitalizing redevelopment introduced by Seoul Mayor Oh Se-hoon. The contest will close on the 29th of next month. After evaluation, the city plans to select around 25 final candidate sites in December, totaling approximately 26,000 housing units.
The eligible sites for participation in the contest are those that meet the legal and ordinance requirements for designation as redevelopment maintenance zones, with more than 30% of landowners wishing to designate the area. The legal requirements for redevelopment zone designation include mandatory items such as ▲ at least two-thirds of buildings being aged and dilapidated ▲ a zone area of at least 10,000 square meters, and optional items where at least one must be met among ▲ at least two-thirds of total floor area being aged ▲ housing road frontage ratio of 40% or less ▲ more than 40% of undersized lots ▲ housing density of 60 units or more per hectare.
Urban regeneration areas, special scenic districts, and historic cultural environment preservation areas, which were excluded from last year's public redevelopment candidate contest due to policy reasons requiring urban management and preservation, are now included in the contest. However, candidates related to public redevelopment and the 2.4 Plan cannot participate. Zones where more than 30% of landowners oppose or exclusive residential areas are also excluded.
With the abolition of the Residential Maintenance Index System, which had been an obstacle to zone designation, development expectations have greatly expanded, especially in severely aged and slum areas. Initial reactions to the simplification of resident consent procedures and the introduction of Rapid Integrated Planning are positive. In areas such as Changsin-dong in Jongno-gu, Seogye-dong in Yongsan-gu, Jeonnong-dong in Dongdaemun-gu, Yangpyeong-dong in Yeongdeungpo-gu, and Chang-dong in Dobong-gu, consent collection has already begun even before the contest.
◆ Villa prices soaring amid redevelopment expectations = This contest is expected to be the first step toward achieving the "Seoul Vision 2030" announced by Mayor Oh Se-hoon on the 15th. Mayor Oh stated that 500,000 housing units will be supplied over the next 10 years through the normalization of redevelopment and reconstruction.
However, the soaring villa prices driven by redevelopment expectations are a concern. According to KB Kookmin Bank, the cumulative increase rate of multi-family and row house sales prices in Seoul this year is 4.73%, 1.7 times higher than 2.77% during the same period last year. The increase rate, which was only 0.22% in June, surged to 0.63% in July and 0.73% in August. The rise in apartment sales and jeonse prices has led to increased villa purchases by the housing non-owners, and Mayor Oh's redevelopment revitalization policy is analyzed to have stimulated speculative demand.
If the redevelopment revitalization policy threatens the housing stability of ordinary citizens, Mayor Oh's supply plan could face setbacks. He has already experienced a halt in reconstruction revitalization policies due to price increases in reconstruction complexes early in his term. Accordingly, the city plans to fundamentally block share splitting such as new multi-family housing construction after the public redevelopment contest announcement and designate the areas selected as final candidate sites as land transaction permission zones.
Kim Je-gyeong, head of Toomi Real Estate Consulting, said, "The fact that villas outnumber apartment sales in Seoul reflects expectations from the city's redevelopment promotion policy," adding, "In places mentioned as having redevelopment potential in Seoul, asking prices have risen by hundreds of millions of won."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
