Unusual Trends Amid the Fog in the Real Estate Market Everywhere
"In the first half of the year, the asking price would increase by 100 million KRW overnight. But these days, the atmosphere has changed a bit," said the representative of W Real Estate Agency in Cheongna-dong, Incheon.
As the apartment sales transaction freeze continues and cases of actual transaction price declines gradually increase, the real estate market outlook is becoming increasingly uncertain. Experts say, "Places that rose late are more likely to fall first," and emphasize the need to focus on areas that have recently experienced a sudden surge to predict the direction of the real estate market.
On the afternoon of the 10th, at Cheongna Lake Park in Cheongna International City, Seo-gu, Incheon, large-scale apartment complexes line the surroundings. In the first half of this year alone, most complexes saw sales prices surge by more than 10%, leading the nationwide apartment price increase this year. Incheon recorded the highest apartment price increase rate among 17 cities and provinces nationwide in the first half of this year. According to the Korea Real Estate Board, as of the last week of June, apartment prices in Incheon rose by 11.84%, the highest increase among the 17 cities and provinces nationwide.
For example, the actual transaction price of an 82㎡ (exclusive area) unit in ‘Centum Daekwang Roseviang’ in Cheongna District soared from 629 million KRW in February to 847 million KRW in August. The asking price has easily exceeded 1 billion KRW. The W Real Estate representative said, "Recently, news about the Asan Hospital being established here has significantly increased the asking prices."
The situation is similar in Songdo International City, the eldest among Incheon’s three major free economic zones. The asking price of a 139㎡ unit in ‘Songdo Castle & Haemoro,’ which was traded at 899 million KRW in January, has now surged to 1.5 billion KRW. A representative from D Real Estate in Songdo-dong said, "Prices have risen significantly due to the confirmation of the GTX-B line and the perception that it is undervalued compared to Seoul."
A view of an apartment complex located in Jungsan-dong, Jung-gu, Incheon Metropolitan City (within Yeongjongdo).
However, recently, unusual trends have been detected in the Incheon transaction market. Representative D said, "Perhaps due to loan regulations, the number of inquiry calls has significantly decreased." The proportion of transactions with price declines compared to previous transactions has also increased sharply. It was 20.7% in August but rose to 29.1% in September, marking the highest point this year. Listings are also accumulating. According to the real estate big data company Asil, as of the 10th, apartment sale listings in Incheon increased sharply by 45.3%, from 10,979 units three months ago to 15,954 units. This is the highest increase rate nationwide.
The problem is that if Incheon housing prices turn downward, the group most affected will be the 20s and 30s age group. From the beginning of this year until September, the proportion of buyers in their 20s and 30s in Incheon apartments reached 33.2%, up 7.5 percentage points from 25.7% in the same period last year. The rapid rise in housing prices in Seoul and surrounding areas has led many young people to shift their demand for homeownership to relatively affordable Incheon, which is cited as the cause of the increased proportion.
In particular, the surge in supply volume is spreading such concerns. The representative of A Real Estate in Cheongna District said, "Once all the currently under-construction units are completed, we absolutely cannot guarantee a rising market." According to Asil, from 2022, Incheon’s housing supply volume will reach 32,426 units in 2022 and 39,063 units in 2023. Compared to 16,318 units last year and 15,549 units this year, this is nearly double.
Seo Jin-hyung, president of the Korea Real Estate Society (professor at Gyeongin Women’s University), said, "When the real estate market enters a downturn, the places that rose late, not those that rose first, are hit the hardest and fastest." He added, "In that regard, it is necessary to pay attention to market changes in areas such as Nowon and Geumcheon districts in Seoul, and Incheon and Bucheon in the outskirts of Seoul."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
