‘Solo Strength’ in Icheon, Auction Heats Up... 54 Bidders for Apartments Over 20 Years Old

Popularity of Houses Priced Under 100 Million Won
Dozens Gather for Each Property
‘Non-Regulated Areas’ with Lower Tax Burden and Loan Restrictions

Apartment complex in Seoul area (Photo by Yonhap News)

[Asia Economy Reporter Ryu Tae-min] At the court real estate auction held at the Yeoju District Court in Gyeonggi Province on the 16th, the hottest item was a small-to-medium-sized apartment of 59㎡ (exclusive area) in Jinwoo Apartment located in Sinhari, Bubal-eup, Icheon City. This complex, built 22 years ago, attracted 54 bidders and was sold for 273 million KRW, which is more than 1.8 times the appraised value of 150 million KRW. The second highest bid for this property was 260 million KRW, showing fierce competition with only about a 13 million KRW difference from the winning bid.

Although the housing market continues to experience a transaction freeze, the sales and auction markets in non-regulated areas such as Icheon City in Gyeonggi Province are showing signs of increasing heat. Among investors, apartments with a publicly announced price under 100 million KRW are gaining popularity, with dozens of bidders flocking to each property.

According to Gigi Auction, a specialized court auction company, 54 people participated in bidding for a 59㎡ property in Anheung Jugong Complex 1 in Anheung-dong, Icheon City, at the Yeoju District Court auction held on the 9th of last month. Like the previous property, this is an aging complex built 25 years ago, but it found a new owner at 231.99 million KRW, which is 72 million KRW higher than the appraised value of 160 million KRW. Additionally, on the 16th of last month, 32 bidders gathered for a 75㎡ property in Daehocheong 2nd Complex, Changjeon-dong, Icheon, showing multiple cases of dozens of bidders in the Icheon area.

Experts point out that the government's overlapping regulations on multi-homeowners are producing a countereffect, making old small apartments in provincial areas a target for investment. As the government raised acquisition tax rates for multi-homeowners up to 12%, but made exceptions for houses with a publicly announced price under 100 million KRW, many small-scale outside investors trying to avoid government regulations have flocked, concentrating transactions. When a corporation with an office outside the Seoul Metropolitan Area Overcrowding Control Zone (all of Seoul, parts of Incheon and Gyeonggi) purchases a house with a publicly announced price under 100 million KRW, the acquisition tax rate is reduced to 1.1%.

The steady rise of the Icheon real estate market, unlike the frozen Seoul metropolitan real estate market, also seems to have had an impact. Icheon is one of the few non-regulated areas in the metropolitan area, free from restrictions such as loans and resale limitations. As a result, the house price increase rate in Icheon recorded 0.27% as of the second week of March according to the weekly price trend statistics by the Korea Real Estate Board, showing one of the highest figures nationwide.

It is also interpreted that the fact that Bubal-eup in Icheon is the northern terminus of the Jungbu Inland Railway line extending to Chungju has acted as a positive factor. This railway, opened in December last year, allows transfers at Bubal Station to the Gyeonggang Line, enabling travel to Seoul Gangnam area via Pangyo. Additionally, transfers at Chungju Station to the Chungbuk Line are possible, greatly improving transportation convenience.

However, experts also warn that premature purchases in these areas should be approached with caution. Seo Jin-hyung, president of the Korea Real Estate Society (professor at Gyeongin Women's University), said, “Since the entire real estate market is frozen, it will not be easy to maintain a solo rising market going forward,” and added, “We should not overlook the fact that if apartment prices continue to rise, the area could be designated as a regulated zone.”