[2023 Real Estate Outlook] Gangnam·Yongsan 'Recession Quick Sales' in Focus... Caution for Incheon·Daegu 'Excess Supply'

[Asia Economy Reporter Noh Kyung-jo] The areas to watch in Seoul's housing market next year include the Gangnam 3 districts (Gangnam, Seocho, Songpa), Yongsan-gu, and Mok-dong in Yangcheon-gu. Experts have focused on the emergence of urgent sale properties amid the recession and the business potential of redevelopment issue areas. For similar reasons, they judged that there is investment potential in first-generation new towns such as Ilsan and Bundang in the metropolitan area. On the other hand, regions to be cautious about include Incheon and Daegu. They advised that since the market sentiment has become more cautious, there is no need to act hastily.

Gangnam, Yongsan, Yeouido: Positive Development Prospects + Regulatory Relaxation

Interest in the three major downtown areas of Seoul?Gangnam, Yongsan, Yeouido?and the Mok-dong area has persisted over several years. Due to numerous development prospects, these areas are highly valued for their future worth from an investment perspective.

Especially during the market downturn, urgent sale properties are appearing one after another centered around Songpa-gu in the Gangnam area, causing some buyers to reconsider timing. Kim Seong-hwan, Deputy Research Fellow at the Korea Construction Industry Research Institute, said, "Considering the trend, the decline is significant as the rise was large, but Gangnam is a place everyone wants to live in, so there is an advantage in not having to worry about location or future price outlook."

The government's easing of redevelopment regulations is also a positive factor. Lim Byung-chul, Research Team Leader at Real Estate R114, forecasted, "With the announcement of improvements to the redevelopment safety inspection, expectations will rise in areas with many aging complexes." Previously, the government introduced improvement plans for the price ceiling system and the redevelopment excess profit recovery system. Soon, the safety inspection, which is the first and last regulatory hurdle for redevelopment projects, will also be adjusted, with the structural stability criterion lowered from the existing 50% to 30%.

In this context, experts also suggested paying attention to areas under the rapid integrated planning promotion and districts such as Mapo and Nowon-gu. Additionally, Park Won-gap, Senior Real Estate Specialist at KB Kookmin Bank, and Kim Gyu-jung, Head of Asset Succession Research at Korea Investment & Securities, expressed the opinion that rather than specifying regions, one should carefully observe places where the price drop compared to the average transaction price in Q4 last year is large or where unsold discounted and newly built urgent sale properties are appearing.

Senior Specialist Park emphasized, "Buying cheaply is best. Prepare money in advance but avoid impatience. Since timing differs by region, selectively approach places with price merits compared to last autumn's peak."

Focus on First-Generation New Town Urgent Sales... Caution Needed for Incheon and Daegu

In the metropolitan area, there were many mentions of first- and second-generation new towns as areas to watch. Ham Young-jin, Head of Zigbang Big Data Lab, pointed out Bundang, Gwacheon, and Wirye New Towns in Gyeonggi Province, saying, "They have good accessibility to Seoul's Gangnam area, have redevelopment issues, and urgent sale properties are appearing." Kwon Joo-an, Research Fellow at the Construction Policy Research Institute, also viewed the new town housing market outlook as favorable in the long term.

The scope was also expanded to Suwon and Yongin. Ko Jong-wan, Director of the Korea Asset Management Research Institute, explained, "These are not places to buy immediately but should be prioritized when prices have dropped significantly, as the bigger the previous rise, the larger the decline." The apartment sale price in Yeongtong-gu, Suwon, recorded a cumulative decline of 10.10% up to the 14th of last month this year, the largest drop in the metropolitan area.

In Incheon, the priority was Songdo International City. Han Moon-do, Adjunct Professor of Finance and Real Estate at Yonsei University Graduate School of Political Economy, said, "Songdo has good investment potential in the long term if the support line for the price decline is broken." Deputy Research Fellow Kim analyzed, "Although the price drop in Songdo is currently significant, living and industrial conditions within the city are relatively good, and there is a possibility of improved accessibility to Seoul in the future."

On the other hand, caution was advised for the overall Incheon area excluding Songdo. Adjunct Professor Han said, "Incheon and Suwon have an excessive supply of move-in units until 2024, so price declines are likely to intensify. It is better not to buy at least until the end of next year."

Experts were more reserved or cautious about non-metropolitan areas. Director Ko said, "It is not advisable to single out any specific area," but added, "Areas such as Daegu, Pohang, and Gunsan, where population, income, and industrial scale are shrinking and supply is excessive, need reconsideration." Especially in Daegu, the buying demand has significantly weakened while supply continues to increase, creating a burden.

Sejong, the 'administrative capital,' was evaluated as having relatively less concern about further price declines. Sejong recorded the highest annual apartment sale price increase rate (44.9%) two years ago according to Korea Real Estate Board statistics but plunged sharply from the end of last year. Team Leader Lim said, "Prices have been falling for a long time, and population and infrastructure are gradually settling, so considering buying at the bottom is possible."