‘Solo Strength’ Will Icheon Also Collapse... Slowing Apartment Market That Had Been Rising Sharply

Apartment Price Increase Rate Cut by One-Third
Housing Market Freezes, Transactions Decline and Listings Accumulate
Concerns Arise Over Disappearance of Non-Regulated Area Premium

Apartment view in the Seoul area / Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Ryu Tae-min] Even Icheon, which had been experiencing a ‘solo rise’ in the metropolitan area, is now seeing a slowdown in its upward trend. Unlike the first half of the year when housing prices soared to unprecedented heights, the overall apartment market in Icheon appears to be losing buying momentum due to price fatigue, strengthened loan regulations, and interest rate hikes. Additionally, as regional regulations are being lifted mainly in provincial areas, the ‘non-regulated area premium’ that Icheon enjoyed is also coming under threat.

According to the Korea Real Estate Board on the 5th, apartment prices in Icheon City rose by 0.28% last month, which is only about one-third of the previous month’s increase of 0.84%. This contrasts sharply with the first half of this year, when the monthly average growth rate was 1.04%, making Icheon the only area in the metropolitan region to continue its strong upward momentum.

This trend is also reflected in actual transaction prices. For example, a 59.73㎡ (exclusive area) unit in Hyundai 7th Complex, Amiri, Bubal-eup, Icheon City, Gyeonggi Province, set a new record price of 340 million KRW in March but changed hands at 297 million KRW at the end of July, showing a pause in price increases. Similarly, a 59.71㎡ unit in Anheung Jugong, Anheung-dong, rose to 288 million KRW in April but was traded at 250 million KRW on the 16th of last month, indicating a price decline.

Frozen Apartment Market... Inventory Builds as Transaction Volume Drops

Even apartment complexes priced below 100 million KRW, which were popular among investors, are showing signs of stagnation. For instance, a 35.7㎡ unit in Jueun Dasom, Eungam-ri, Bubal-eup, saw its price rise to 103 million KRW at the end of July but was traded at 84 million KRW on the 20th of last month. Another unit of 49.5㎡ in the same complex set a record price of 130 million KRW in May but changed hands at 95 million KRW at the end of last month, reflecting a price drop.

Transaction volume has also significantly decreased. According to the Gyeonggi Real Estate Portal, apartment transactions in Icheon City numbered 121 in July, falling to less than half compared to 272 in April. Last month, the number of transactions was recorded at 79. Considering the 30-day reporting period for transactions, the downward trend is expected to continue.

As transactions slow, inventory is accumulating. According to the real estate big data company Apartment Real Transaction Price, the total number of apartment listings in Icheon as of this date is 1,231, an increase of 159 listings (14.8%) compared to three months ago (1,072 listings). Compared to the same period last year (537 listings), when the housing market was at its peak popularity, this represents an increase of 694 listings (129%).

Price Surge Fatigue Leads to Sellers Outnumbering Buyers

The apartment sales supply-demand index in Icheon is also declining. The supply-demand index for the fifth week of August in the Eastern Gyeonggi 2 region, which includes Icheon, was 97.3. Until the first half of this year, the index was effectively above 100, indicating stronger buying demand than selling pressure, but since July, it has fallen below 100, showing that selling pressure has become stronger than buying demand.

Song Seung-hyun, CEO of City and Economy, explained, “In Icheon’s case, housing prices have risen significantly over time, leading to accumulated price fatigue among buyers. Additionally, strengthened loan regulations and the burden of further interest rate hikes have increased the buying burden.”

Furthermore, the easing of regional regulations under the Yoon Seok-yeol administration is also considered to have had an impact. In June, the government held the Residential Policy Deliberation Committee and lifted the designation of 17 provincial areas from speculative overheated zones and adjusted target areas. Following this, local governments have actively requested the government to lift the adjusted target area status, increasing the likelihood that Icheon’s ‘non-regulated area premium’ will lose its appeal in the future.