[Real Asset Strategies] Considering Buying a Home? Spotlight on Provinces with Positive Prospects

Provincial Real Estate Gains Momentum After Metropolitan Loan Restrictions
Government Announces Second Home Support Policy
"Focus on Properties with Good Value for Money"

The number of Seoul residents purchasing homes in provincial areas has surged. This buying trend has emerged suddenly amid a stagnant market characterized by a buildup of unsold newly built properties. Analysts attribute this to the growing number of buyers turning their attention to local real estate with favorable prospects, as the government has imposed a 600 million won cap on mortgage loans in the Seoul metropolitan area. The government is also seeking to revitalize the local market by expanding support for second homes, raising interest in whether this uptick in buying sentiment will develop into a sustained trend.

Buying Real Estate in Provinces Like South Gyeongsang

According to the Court Registration Information Plaza on September 17, the number of Seoul residents who purchased collective housing (such as officetels, apartments, row houses, and multiplex houses) in non-metropolitan areas last month reached 1,382. This is an increase of 125 compared to 1,257 in June, before the metropolitan area loan restrictions were implemented. In contrast, the number of Seoul residents buying real estate within Seoul dropped by 22%, from 16,068 to 12,533 during the same period, indicating that buyers are turning their attention to provincial markets not affected by loan regulations.

Seoul residents buying provincial real estate have focused on areas with clear positive factors among non-metropolitan regions. After the introduction of loan restrictions, the regions that saw increased buying activity were limited to South Gyeongsang Province (from 77 to 329, up 327.2%), Gangwon Province (from 159 to 419, up 163.5%), and North Chungcheong Province (from 68 to 126, up 85.3%).

South Gyeongsang Province has received an investment of 462.2 billion won from the Ministry of Oceans and Fisheries to support the development of Changwon Jinhae New Port and Busan Port as smart ports. The region is also expected to benefit from increased cargo volume if the Arctic shipping route is activated. New apartment complexes and other residential buildings are being constructed in the new urban area of Jinhae District.

In Wonju and Chuncheon, Gangwon Province, expectations for the extension of the Greater Seoul Metropolitan Express Railway (GTX) have been reflected in the real estate market. Wonju will be connected by the GTX-D line, which runs through Gangnam to Gimpo and Incheon, while Chuncheon will be served by an extension of the GTX-B line, which passes through Songdo, Yeouido, Seoul Station, and Cheongnyangni. In North Chungcheong Province, the presence of major corporations such as SK Hynix and LG Household & Health Care in Cheongju Technopolis is seen as a contributing factor.

Ulsan and Busan Real Estate Markets Also Attract Attention

In addition to these regions, the Ulsan real estate market is also drawing attention due to policy benefits. The market is abuzz with expectations that the "MASGA (Make American Shipbuilding Great Again) Project," aimed at strengthening shipbuilding cooperation between South Korea and the United States, will be launched. Ulsan is home to more than 580 shipbuilding companies, and if the MASGA Project proceeds, it is expected to revitalize the local economy through industrial resurgence and population inflow.

Ulsan's outlook for new housing supply is also positive. According to the September Apartment Supply Outlook Index, surveyed by the Housing Industry Research Institute among housing developers, Ulsan scored 107.1, up 33.8 points from the previous month. This index quantifies the conditions of apartment complexes that are about to be supplied or are currently being supplied, based on responses from housing developers. A score above 100.0 indicates a positive outlook for new housing supply. The Housing Industry Research Institute explained, "Among non-metropolitan areas, Ulsan saw a significant rise in this index, likely due to expectations that it will be the biggest beneficiary of the MASGA Project, which is being promoted as part of Korea-U.S. shipbuilding cooperation." In addition, North Chungcheong Province rose by 16.7 points, Daejeon by 14.7 points, North Gyeongsang Province by 9.6 points, and South Gyeongsang Province by 1.9 points.

Busan is also experiencing renewed activity in its real estate market, thanks to the Ministry of Oceans and Fisheries' planned relocation to the nearby Busan North Port. The number of apartment sales in Dong-gu, adjacent to North Port, increased from 42 in January to 70 in July. With about 850 government employees expected to move, and considering their families and related agency staff, there is analysis that thousands of people could relocate to the area over the long term. The government also plans to relocate shipping companies such as HMM, establish a maritime specialized court, and set up the Southeast Investment Bank. These positive factors are having a favorable impact on the entire Busan real estate market. According to the Korea Real Estate Board's nationwide apartment price trend survey for the first week of September, Busan apartment prices have stopped declining for the first time in three years.

Stronger 'Second Home' Policy

The government's move to strengthen the second home policy through tax support is also expected to further boost interest in provincial real estate. Last month, the government announced its "Plan to Strengthen Construction Investment Focused on Provincial Areas," which includes tax reduction measures for home purchases in depopulated areas to stimulate demand for local real estate (up to 50% reduction in acquisition tax, special provisions for capital gains and property holding taxes, etc.). The criteria have also been relaxed, raising the home price standard (official price) from 400 million won to 900 million won, and the acquisition price standard from 300 million won to 1.2 billion won. In addition, nine regions outside the depopulated areas-Gangneung, Sokcho, Gyeongju, Tongyeong, Iksan, Gimcheon, Sacheon, Inje, and Donghae-have been newly designated as eligible for the second home policy.

However, as the provincial market remains sluggish with persistent unsold inventory, experts advise that those considering second home investments should focus more on utility value rather than expecting immediate price increases. Yoon Sumin, a real estate specialist at NH Nonghyup Bank, said, "It is difficult for demand and prices to suddenly rise in areas with declining populations, so buyers should focus on properties with good utility and cost-effectiveness," adding, "As the risk of regional extinction becomes more prominent, the government may move to further expand support for 'second homes'."