Expectations of Spillover Benefits in Non-Metropolitan Areas Due to Loan Regulations
All Real Estate Agencies in Prime Locations like Haeundae Say "Nothing Has Changed"
"There is still no movement yet."
As of June 27, strong financial regulations have tightened the real estate market in the Seoul metropolitan area, but the non-metropolitan real estate market remains calm and unchanged. Although the metropolitan real estate market is now subject to strict regulations, such as a maximum home mortgage loan limit of 600 million won, investment funds have not yet left the metropolitan area. Experts unanimously agree that in order to resolve the downturn in the regional real estate market, measures tailored specifically to the regions?such as resolving unsold housing and revitalizing the local economy?are necessary.
On July 3, when asked about the market situation after the loan regulations at 10 real estate agencies in major areas such as Haeundae-gu in Busan, Beomeo-dong in Suseong-gu in Daegu, Sinjeong-dong in Nam-gu in Ulsan, and Bongseon-dong in Nam-gu in Gwangju, all responded that "there has been no change before and after the regulations."
The loan regulations announced on June 27 limit the maximum mortgage loan for homes in the metropolitan area to 600 million won. In addition, restrictions on multi-homeowners and gap investment have effectively blocked loans for home purchases not intended for actual residence. As a result, some analysts predicted that investment funds circulating in the metropolitan area could move to major high-demand areas in the regions. However, real estate agents report that there has not yet been any noticeable change, such as an increase in inquiry calls.
A real estate agency in Haeundae-gu stated, "It is true that there were expectations that investors would come to Haeundae-gu if the real estate market in Seoul cooled down," but added, "It seems that not only in the metropolitan area, but also in the regions, expectations for real estate have diminished."
The situation is the same in Beomeo-dong, known as the Daechi-dong of Daegu. Although it is considered a valuable investment destination because of steady real demand for apartments, there has been no change since the loan regulations. A real estate agency in Beomeo-dong said, "Aside from genuine buyers who have been looking into apartment purchases for some time, there have been no additional inquiries," and added, "Nothing has changed." The situation is similar in Sinjeong-dong in Ulsan and Bongseon-dong in Gwangju, which are considered high-demand areas due to excellent education and infrastructure.
Currently, the regional real estate market remains stagnant, with a surge in unsold homes. According to housing statistics from the Ministry of Land, Infrastructure and Transport, the number of unsold homes in the regions after completion in May was 22,397 units, an increase of 2.3% from the previous month. In particular, Jeonbuk recorded 1,049 unsold homes, up 42.3% from the previous month, highlighting the difficulty in resolving 'chronic unsold inventory.'
Experts point out that fundamental issues such as oversupply and lack of demand must be resolved in order to revive the regions. Yoon Sumin, a real estate specialist at NH Nonghyup Bank, said, "With the new loan regulations making gap investment in the metropolitan area more difficult, there may be an effect of preventing such investments from moving from the regions to Seoul, but it is uncertain whether that liquidity will actually lead to real estate transactions in the regions." He added, "The possibility of a balloon effect causing a rapid surge in regional real estate prices is very low." He continued, "It is necessary to manage supply and increase demand," and emphasized, "To increase demand, ultimately, real estate policies must be linked to industries that create jobs and foster companies."
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