[Report] "Buy Now Before Regulations"... Mapo Hits Record Transaction Prices, Seongdong Pushing Up Asking Prices [Real Estate AtoZ]

Transactions Surge Like the Early-Year Boom
Mapo Prestige Xi 84㎡ Units Trade in the Low to Mid-2.8 Billion KRW Range
Seoul Home Upgraders and Buyers from the Greater Seoul Area Jump In
Seongdong-gu Recovers Pre-Regulation Asking Prices
Oksu Pa

"Whenever a transaction occurs in Mapo, it sets a new record high. If the area is designated as a Land Transaction Permit Zone or a regulated area, gap investment becomes impossible, so there's a sense of 'let's do it now.' There aren't many listings either." (Real estate agent A in Yeomni-dong, Mapo-gu)

"During the property boom at the beginning of the year, listings sold at their asking prices. Buyers who had been waiting on the sidelines are now making purchases despite higher prices, spurred by news of additional regulations." (Real estate agent D in Oksu-dong, Seongdong-gu)

A view of the Mapo Prestige complex in Yeomni-dong, Mapo-gu, Seoul. Photo by Jinju Han

Concerns are growing that Mapo-gu and Seongdong-gu in Seoul could be designated as Land Transaction Permit Zones or regulated areas (adjustment target areas or speculative zones), which has ignited buyer sentiment. After the June 27 loan restrictions, inquiries that had previously dried up are now surging again, and whenever properties are sold, they set new record prices, resulting in a "panic buying" phenomenon. The current activity is reminiscent of the market boom earlier this year.

On the afternoon of September 19, real estate agencies in Geumho-dong and Oksu, Seongdong-gu, were busy answering inquiry calls despite the rainy weather. In Yeomni-dong, Mapo-gu, agencies were also receiving calls from people wanting to view homes over the weekend, coordinating appointments, and negotiating prices with sellers. Most agencies in these areas reported, "Since last month, transactions have picked up again, and properties are being sold at prices higher than the previous record highs."

Mapo’s Top Complex Surpasses 2.8 Billion Won: "Feels Like Early This Year"

The 84-square-meter units at Mapo Prestige Xi in Yeomni-dong, considered the top complex in Mapo-gu, have been traded for between 2.82 billion and 2.84 billion won this month. The current asking prices for similar units have climbed to the 3 billion won range. The previous record high was 2.75 billion won. Earlier this year, units were trading in the 2.4 billion won range. The head of agency A near Mapo Prestige Xi commented, "It feels similar to the frenzied price increases in the first half of the year," adding, "After the September 7 policy announcement, concerns grew that the area could be regulated as a Land Transaction Permit Zone, which would block gap investment. This led to a surge in listings, but most were sold within just a few days."

Demand is pouring in from various areas. The head of agency B said, "Recently, we've had purchase inquiries from Dongtan and Suwon, and there is steady demand from people in Seodaemun and Eunpyeong looking to move up." The head of agency A added, "Before prices started to rise, gap investment was possible at 1.2 billion won, but due to loan restrictions, it's now harder to secure additional funds. Buyers who used to look for properties here are now choosing similar new complexes like E-Pyunhansesang Sinchon or Godeok Gracium, or switching to 59-square-meter units within the same complex."

Recently, online communities have been buzzing with rumors that 84-square-meter units at Mapo Prestige Xi traded for 3 billion won. The head of agency B clarified, "It is true that transactions have occurred up to 2.82 billion won, but 3 billion won is just a rumor. With everyone raising prices, there are concerns about price manipulation, so nowadays, people are delaying the official reporting of actual transaction prices."

The revived buying sentiment since last month is also evident in the data. According to the Seoul Real Estate Information Plaza, apartment transactions in August reached 4,015, up from 3,937 in July, right after the loan restrictions. As of the 22nd, the number of transactions this month stands at 1,789, indicating that the impact of the loan restrictions is gradually waning.

According to KB Real Estate's Weekly Apartment Market Trends, as of September 15, Seoul's index rose by 0.21, marking the fourth consecutive week of increasing gains. Seongdong-gu has seen five consecutive weeks of increases since the second week of August, reaching 0.62 in the third week of September. Mapo-gu's index was 0.29, a slight decrease from the previous week (0.34), but still higher than the Seoul average. The Seoul Buyer Sentiment Index, which reflects buyer sentiment, also rose for the fourth consecutive week, reaching 67.0.

Oksu Parkhills Apartment, Seongdong-gu, Seoul. Photo by Lee Jieun

Seongdong-gu: Properties Change Hands Despite High Asking Prices ... Buyers Grow More Active

In Seongdong-gu, talk of potential designation as a regulated area is causing home prices to fluctuate. At Oksu Parkhills in Oksu-dong, a 59-square-meter unit recently sold for 2.315 billion won, surpassing the previous record high of 2.27 billion won. A representative from agency C said, "With growing speculation that the area could soon be regulated, more customers are inquiring about buying quickly. Although transactions are limited, they continue to occur, pushing up asking prices."

With listings drying up and asking prices rising, it has become difficult to buy unless one is willing to pay a record price. At Raemian Oksu Riverzen, a 59-square-meter unit set a record at 2.1 billion won last month, and this month, units have traded at even higher prices. A representative from agency D near the complex said, "There are so few listings on the market that transactions are like finding a needle in a haystack, and they're happening at very high asking prices. Buyers who had been waiting due to loan restrictions are now snapping up properties at high prices since talk of Land Transaction Permit Zones and regulated area designation began last month."

At Kumho Doosan Apartment in Geumho-dong, which is undergoing a reconstruction push, the number of listings has plummeted. The previous record highs were 1.27 billion won for a 59-square-meter unit and 1.48 billion won for an 84-square-meter unit, but now only units priced more than 100 million won higher are available on the market. The head of agency E nearby said, "Thanks to the reconstruction prospects, all the listings have been swept up. After the loan restrictions, gap investment demand has definitely dropped," adding, "If the area is designated as a Land Transaction Permit Zone, the local real estate market will take a significant hit."

Some believe that even with additional regulations, prices are unlikely to fall. The head of agency E explained, "If designated as a Land Transaction Permit Zone or similar, there will be various restrictions, from proof of funding to mandatory owner-occupation, so there may be a temporary impact. However, most apartment owners in the Oksu and Geumho-dong areas are children of residents in Apgujeong or professionals, so it's unlikely that asking prices will drop significantly."

Raemian Oksu Riverzen Apartment, Seongdong-gu, Seoul. Photo by Lee Ji-eun

"FOMO Buying Continues; Asking Prices Will Keep Rising Even If Regulations Are Imposed"

Experts believe that so-called "FOMO" (Fear of Missing Out) demand is likely to concentrate as buyers try to secure properties before new regulations are introduced. Ham Youngjin, head of Woori Bank's Real Estate Research Lab, said, "Transaction volume stagnated for two months but has picked up again this month. With the possibility of designation as a Land Transaction Permit Zone or stricter loan regulations, buyers are rushing to make decisions." He added, "Gap investment demand is especially strong for 59- and 84-square-meter units in Seongdong, Mapo, Dongjak, Gwangjin, and Gangdong-gu. The possibility of interest rate cuts and a decrease in supply are also contributing to the current atmosphere, which is likely to continue for some time."

Some experts also believe that while transactions may temporarily contract if the area is designated as a Land Transaction Permit Zone, asking prices will continue to rise. Yoon Sumin, a real estate expert at NH Nonghyup Bank, noted, "Recently, we have seen record prices being renewed within 100 days in complexes in Seongdong-gu and Mapo-gu. If these areas are designated as Land Transaction Permit Zones, transactions will shrink significantly and demand may shift to the three Gangnam districts. However, due to expectations of further price increases, we are likely to see a situation where transactions decrease but asking prices continue to rise."