'Jun-Gangnam' Gwacheon Also Struggles with Transaction Freeze... 66 Cases This Year

Apartment view in the Wonmun-dong area, Gwacheon-si, Gyeonggi Province (Photo by Ryu Taemin)

[Asia Economy Reporter Ryu Tae-min] Even Gwacheon, considered a 'quasi-Gangnam' area, has frozen solid due to consecutive interest rate hikes and loan regulations. The apartment price decline is intensifying as high-priced complexes, which are directly affected by loan regulations, are concentrated here, and the area was recently excluded from the real estate regulation lift zones.

According to the Gyeonggi Real Estate Portal on the 21st, only 66 apartment sales transactions have been recorded in Gwacheon City this year. This is less than one-third compared to last year's 232 apartment transactions in Gwacheon. On a monthly average basis, this year only saw 6 transactions, a significant decrease from last year's 19.3 transactions. According to Gwacheon City, as of 2022, there are 15,220 apartment households in the city.

With transactions virtually halted, listings are piling up. According to Asil (Apartment Real Transaction Price), a big data real estate platform, as of the previous day, there were 421 apartment listings in Gwacheon City. This is an increase of 138 listings (48.7%) compared to early this year (283 listings).

Apartment sale prices are also on a downward trend. According to the weekly apartment price trend survey by the Korea Real Estate Board, apartment prices in Gwacheon have fallen for 36 consecutive weeks, dropping 5.20% compared to the end of last year. Notably, in the second week of November, the most recent data, prices fell by 0.83% in just one week, indicating an accelerating decline.

Actual price drops in transactions are also occurring frequently. According to the Ministry of Land, Infrastructure and Transport's real transaction disclosure system, an 84.9㎡ (exclusive area) unit in 'Central Park Prugio Summit' in Burim-dong, Gwacheon, was sold for 1.58 billion KRW on the 22nd of last month. This price is 570 million KRW lower than the highest price of 2.15 billion KRW recorded in December last year for the same unit size, which had entered the '2 billion club.' Considering that this was a transaction through a licensed real estate agent, it is unlikely to have been a direct family sale.

The large complex 'Raemian Sure' in Wonmun-dong, with about 2,900 households and once considered the area's flagship, saw an 84.9㎡ unit sold for 1.265 billion KRW on the 4th. This is 515 million KRW lower than the sale price of the same unit size in September last year, which was 1.78 billion KRW.

The more severe transaction freeze in Gwacheon compared to other Gyeonggi areas is attributed to the impact of loan regulations. Gwacheon, known as a 'quasi-Gangnam' area, has many high-priced apartments exceeding 1.5 billion KRW, making it highly susceptible to loan restrictions. Additionally, recent consecutive interest rate hikes have increased interest burdens, further freezing buyer sentiment.

Moreover, Gwacheon was excluded from the real estate regulation lift plan announced on the 10th, so this situation is expected to continue. A representative from a licensed real estate office in Wonmun-dong, Gwacheon, said, "Unless it is a quick sale priced significantly below market value, transactions are not happening," adding, "With most nearby areas having their regulations lifted, we are worried that even the remaining demand might move away."