- Soaring Sale Prices Surge 14.86% Year-on-Year
- Mandatory Zero-Energy Building Certification to Be Enforced from Next Year
The rate of increase in apartment sale prices is growing every year. This is interpreted as a result of the long-standing high-interest rate trend combined with skyrocketing construction costs triggered by rising raw material prices and labor costs. As the soaring sale prices spread the perception that "today is the cheapest," prospective homebuyers preparing to purchase their own homes are feeling the pressure.
According to the "Private Apartment Sale Price Trends" announced by the Housing and Urban Guarantee Corporation (HUG), as of June this year, the nationwide private apartment sale price was 5.64 million KRW per square meter (㎡), up about 14.86% (7.3 million KRW) compared to the same month last year (4.91 million KRW). Compared to the 5.86% (2.42 million KRW) increase from May 2021 to May 2022 and the 11.77% (5.15 million KRW) increase from May 2022 to May 2023, the annual rate of increase has expanded.
Since Zero Energy Buildings (ZEB) will be mandatorily introduced for private apartments with 30 or more households starting next year, the upward trend in sale prices is expected to continue for the time being. According to an analysis by the Korea Research Institute for Construction Industry, when multi-family housing is constructed as a Zero Energy Building, construction costs increase by 4-8% compared to the standard construction cost ceiling price.
In this environment, apartments under the price ceiling system, which have relatively competitive prices, are regarded as blue chips in the subscription market. According to the Korea Real Estate Agency’s Subscription Home, ‘Eliph Namwirye Station Eduforet’ in Seongnam, Gyeonggi Province, and ‘Jeil Punggyeongchae Geomdan III’ in Seo-gu, Incheon, recorded high competition rates of 43.73:1 and 44.48:1 respectively for first-priority subscriptions. Both complexes are price-ceiling system complexes launched on public land and were priced reasonably.
An industry insider said, “Price-ceiling system apartments are supplied at prices lower than surrounding market prices, so they are popular in the subscription market due to less price burden. Also, after moving in, through price matching with surrounding apartments, relatively large capital gains can be expected, so investment demand is also abundant,” adding.
According to actual transaction prices from the Ministry of Land, Infrastructure and Transport, ‘Misa Station Paragon’ supplied in Misa Riverside City, Hanam, Gyeonggi Province, attracted popularity with a sale price of 14.3 million KRW per 3.3㎡ at the time of sale (May 2018), which was cheaper than the average price of 18.34 million KRW per 3.3㎡ in the Hanam area. In July this year, a 102㎡ exclusive type was sold for 1.365 billion KRW (29th floor), more than twice the sale price of that type (568.2 million KRW).
Additionally, the ‘Geomdan New Town Woomee Lin The Signature’ 84㎡ exclusive type in Seo-gu, Incheon, was traded for 756 million KRW (21st floor) in May this year, showing an 80% capital gain compared to the sale price of about 420 million KRW for that type. Also, the nearby ‘Geomdan New Town Prugio The Venue’ 84㎡ exclusive type was sold for 740 million KRW (21st floor) in June this year, more than 300 million KRW higher than the sale price of 423.2 million KRW for the same type.
Accordingly, attention is focused on newly supplied apartments under the price ceiling system. ‘Goyang Janghang Atera,’ which is about to be sold in the Janghang district of Goyang, is the main subject.
‘Goyang Janghang Atera,’ developed by the Kumho Construction consortium on B-3 block in Janghang-dong, Ilsandong-gu, Goyang-si, Gyeonggi Province, consists of 8 buildings with 760 households from basement 2 to a maximum of 29 floors. All units are composed of a single exclusive 84㎡ type, which is highly preferred by actual users.
‘Goyang Janghang Atera’ is attracting attention as an opportunity for homeownership among non-homeowners and actual users. As a sale complex within a public housing district, the price ceiling system will be applied, and a reasonable sale price is expected compared to similar nearby market prices. Given the rapidly rising sale price trend combined with difficult domestic and international conditions such as high inflation and high interest rates, it is expected to be a much-needed relief for prospective buyers.
Excellent location with access to various infrastructures is also considered a strength. Janghang Elementary School and kindergarten, located in front of the complex, are scheduled to open in September this year. Planned sites for middle and high schools are within a 5-minute walk, and major academy districts such as Baekma Academy and KINTEX Academy are easily accessible.
Furthermore, movement to adjacent areas is convenient via Hallyu World Road adjacent to the complex. Access to Janghang IC and Hallyu World IC is also convenient when using nearby Jayuro and Second Jayuro roads. Madu Station on Line 3 is located 6 minutes by car, and the nearby KINTEX Station (tentative name) on the GTX-A line is about to open, further improving accessibility to Seoul and neighboring metropolitan areas.
Living infrastructure is well established. Residents can enjoy diverse and high-quality facilities such as Lotte Department Store Ilsan Branch, Hyundai Department Store KINTEX Branch, KINTEX, La Festa, and One Mount, as well as Traders Home Sale Club, Costco Ilsan Branch, and Inje University Ilsan Paik Hospital. The proximity to Ilsan Lake Park and the Han River makes the residential environment pleasant and is expected to positively affect residents’ leisure activities.
Subscription eligibility requires applicants to be residents of the metropolitan area with a subscription savings account held for more than one year, meeting deposit requirements by area and size, and aged 19 or older to apply as first priority. Regardless of re-winning status, household members and homeowners can also apply. Priority supply ratios are 30% for residents of Goyang City for more than one year, 20% for residents of Gyeonggi Province for more than six months, and 50% for metropolitan area residents.
The model house for ‘Goyang Janghang Atera’ is scheduled to be set up in Deogeun-dong, Deogyang-gu, Goyang-si, Gyeonggi Province.
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