All five apartment complexes where gap investments were most active last year continue to see new record lows in prices. Although corporate and non-local investors flocked due to the balloon effect caused by multi-homeowner regulations, the entire real estate market has frozen due to loan restrictions and interest rate hikes, delivering a direct blow.
According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system on the 18th, a 49.98㎡ unit in Changwon Seongwon Apartment was traded for 188 million KRW on the 24th of last month. Compared to a similar unit that was sold for 270 million KRW in October last year, this represents a drop of about 30.4% (82 million KRW) in just three months. This large complex with a total of 6,252 households saw 639 transactions in the past year, of which 179, or 28%, were gap investments involving jeonse (long-term deposit lease). This is the highest volume of gap investment transactions nationwide.
During the same period, Anseong-si Jueun Cheongseol Apartment, which ranked second nationwide with 169 gap investment transactions, is also experiencing a significant price decline. A 39.75㎡ unit in this complex was traded at a peak price of 175 million KRW in September last year but was sold for 130 million KRW on the 6th of this month, a drop of about 25% (45 million KRW). The Cheonan and Asan areas, where corporate and multi-homeowner buying was active, are facing similar situations. A 39.27㎡ unit in Cheonan Chowon Green Town was traded this month for 85 million KRW, down 10.5% (10 million KRW) from 95 million KRW in September last year, and a 38.49㎡ unit in Asan Baebang Samjeong Green Core was sold for 100 million KRW this month, down 16.7% (20 million KRW) from 120 million KRW in November last year.
The government raised acquisition tax rates up to 12% based on the number of owned houses through the July 10, 2020 measures. However, for houses with a publicly announced price of 100 million KRW or less, the basic acquisition tax rate (1.1%) applies regardless of the number of houses owned. In non-regulated areas, houses priced at 300 million KRW or less were also excluded from capital gains tax surcharges. This is the background for speculative demand from multi-homeowners and corporations concentrating in these areas and complexes.
In particular, large complexes with more than 1,000 households attracted investors because of high transaction volumes and continuous inflow of new buyers, making short-term profits possible. However, since the second half of last year, the intensification of interest rate hikes and loan regulations has deepened the transaction freeze, and these complexes and areas have struggled. The head of A Real Estate Agency in Gongdo-eup, Anseong-si, said, "Until last summer, purchase inquiries were pouring in, but the atmosphere completely changed from the second half of the year," adding, "Even if properties are listed as urgent sales, inquiries are scarce." In fact, Jueun Cheongseol had about 50 listings in July last year, but recently there are more than 110 listings, more than double.
The problem is that the transaction freeze in these areas is likely to continue for the time being. Since house prices surged sharply in the short term due to buying for short-term profits, they are inevitably directly affected by the contraction of the real estate market. Ko Jun-seok, adjunct professor at Dongguk University Law School, said, "Since the entire real estate market is showing a weakly stable state due to the transaction freeze, it is especially necessary to be cautious about newly entering apartments priced below 100 million KRW at this point, whether for actual residence or investment."
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