Record-high Prices Set Even in Early Reconstruction Phase
Generous Land Shares Drive Demand
Jeonse and Monthly Rental Listings Plunge 75% in One Year
Home and Jeonse Prices Soar as Relocation Begins
An apartment in Gwacheon-si, Gyeonggi-do has surpassed 3 billion KRW. Record-high transactions are continuing, particularly in low-rise reconstruction complexes. With demand far exceeding supply, Gwacheon has recorded the highest apartment price growth rate in the country this year.
According to the Ministry of Land, Infrastructure and Transport’s actual transaction price disclosure system, from April 1 to May 23, there were 126 apartment transactions in Gwacheon-si (based on reporting date), and 32% of these (40 transactions) set new record-high prices.
40-pyeong unit with 48.8-pyeong land share... Demand concentrates on low-rise reconstruction complexes
Jungang-dong Jugong 10 Complex, considered one of Gwacheon's representative reconstruction complexes, has seen a series of record-high transactions. Although this complex is still in the early stages of its reconstruction project, it consists of five-story low-rise apartments, and each household has a generous share of land, attracting investment demand. Expectations that the share to be received upon reconstruction will be substantial have been reflected in prices.
A 124-square-meter (2nd floor) unit in Jugong 10 Complex was sold for 3.1 billion KRW on March 17, setting a new all-time high. This is 100 million KRW higher than the previous record set in August last year. Similarly, a 105-square-meter (3rd floor) unit changed hands for 2.9 billion KRW on April 18, setting a new record only three weeks later.
A local real estate agent in Jungang-dong stated, "The 124-square-meter unit that set a new record has an exclusive area of about 40 pyeong, but the actual land share is 48.8 pyeong. In high-rise apartments, the land share is distributed among more households, but in this low-rise complex, each household receives a larger share, resulting in greater expected profits upon future reconstruction."
The shortage of available homes, caused by the start of relocation in large apartment complexes, is also driving up apartment prices in Gwacheon. According to Korea Real Estate Board, this week’s apartment sale prices in Gwacheon rose mainly in Byeoryang-dong and Wonmun-dong, where redevelopment projects are underway, increasing by 0.23% compared to the previous week. Jugong 8 and 9 Complexes have already begun relocation, and Jugong 5 Complex received management disposition approval in March and will begin relocation in the second half of this year.
Another real estate agent commented, "There are many people looking for reconstruction apartments, but not many listings, so prices rise every time a transaction occurs. Most urgent sales have already been exhausted, and with about 2,100 households starting relocation from Jugong 8 and 9 Complexes in Burim-dong, the number of homes available for sale has decreased even further."
A 73-square-meter (10th floor) unit in Jugong 8 Complex was sold for 1.9 billion KRW on May 2. The actual transaction price rose by 422.45 million KRW compared to a month earlier. In Byeoryang-dong Jugong 5 Complex, a 124-square-meter (3rd floor) unit was sold for 2.8 billion KRW, which is 100 million KRW higher than the previous record and marks a new high.
Jeonse and monthly rental listings down 75.5%... New supply also missing
As demand for relocation due to reconstruction surges, jeonse and monthly rental listings in Gwacheon are rapidly decreasing. With existing residents relocating all at once, demand in the jeonse and monthly rental market has concentrated, and as these residents search for new homes nearby, a shortage has emerged. According to real estate big data firm Asil, as of this date, there were 132 jeonse and monthly rental listings in Gwacheon, a 75.5% decrease from 537 listings a year ago.
New supply is also insufficient. The only new housing supply scheduled in Gwacheon this year is the Juam Janggunmaeul Housing Redevelopment Project (The H Adelstar) in August, which will provide 880 units. Of these, only 348 units will be available for general sale.
With a lack of new supply to support the jeonse and monthly rental market, combined with increased relocation demand, jeonse prices are also rising. According to the Korea Real Estate Board’s recently released 'Weekly Apartment Price Trends for the Third Week of May (as of May 19)', jeonse prices for apartments in Gwacheon have risen by 0.34% this year, recording a cumulative increase of 3.83%, the highest in the country. The sale price growth rate was also 5.53%, surpassing Songpa (5.21%), Gangnam (4.77%), and Seocho (4.39%), the three main districts of Gangnam.
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