"Cash-Rich Seniors Arrive After Watching TV"... Home Prices Surge in Non-Regulated Areas [Real Estate AtoZ]

A Look Inside Non-Regulated Areas
Guri, Gunpo, and Anyang See Prices Rise by Tens of Millions of Won
Listings Disappear as Asking Prices Climb Daily
Gap Investments Account for 90% of Contracts Near Gunpo

"The bank calls first. They ask if property prices have gone up again today."

On the evening of the 25th, the head of a certified real estate agency located near a subway station in Guri, Gyeonggi Province, was on the phone well past 8 p.m. This agency is a partner for KB Real Estate market price surveys. He explained, "Normally, I input prices every week, but these days, the banks can't wait and call me directly," adding, "With transaction volumes surging, they want real-time updates." The KB market price is used as a benchmark by commercial banks to determine collateral values and set loan limits. As transaction volumes in this area have soared, actual transaction prices have been rising daily, prompting banks to reach out proactively.

Recently, this area has seen a line of people wanting to buy homes after being excluded from the "October 15 Policy Measures," which imposed multiple layers of restrictions such as land transaction permit zones across all of Seoul and most of Gyeonggi Province. Most buyers expressed anxiety that "by the end of the year, this area could also become a regulated zone," and were rushing to close deals.

Brokerages on Emergency Duty... 'Cash-rich' Seniors Arrive After Watching TV

On the 25th, rental listings for commercial properties were posted in front of a real estate agency near Jangja Lake Park Station in Guri, Gyeonggi Province. For apartments, only a notice saying "Please come in for consultation" was displayed. This clearly illustrates the situation where, following the October 15 policy measures, buying demand surged rapidly, and properties available on the market have dried up. Photo by Choi Seoyoon

Not only in Guri, but also in Gunpo and Manan District of Anyang-areas that escaped the new regulations-home prices have soared to unprecedented levels since the announcement. Investors seeking gap investments have flocked in, driving up transaction volumes and causing listings to be quickly snapped up. Real estate agencies predicted that by next month, it would be difficult to find any properties for sale.

In particular, Guri is experiencing a "balloon effect," with leftover investment demand from regulated areas like Seoul now flowing in and pushing up prices. The asking price for a 70-square-meter LG Wonyang Apartment near Jangja Lake Park in Sutaek-dong, Guri, rose by 50 million won in just one week. A realtor in Sutaek-dong said, "Normally, there are about two transactions a month, but in the past week, there have been four contracts," adding, "There was even a case where someone came from Sejong to make a gap investment." He continued, "In 30 minutes, more gap investors are coming to see a 34-pyeong home, so I'm waiting for them," and explained, "Usually, we work every other Saturday, but now everyone has to come in."

A realtor in Topyeong-dong said, "Inquiries have increased fivefold compared to before the policy announcement," adding, "People are afraid sellers will raise prices, so they sign contracts late at night on the same day they view a home." Another agent near Guri Station in Inchang-dong said, "Previously, it was mostly young people studying real estate who were active, but since the new measures, many seniors have been coming in," adding, "Because the media covers real estate every day, some seniors who watch TV frequently come in saying, 'I have 500 to 600 million won in cash. If you have a good property, let me know right away.'"

There are also typical cases of "buy first, sell later" that appear during price surges. Driven by the fear that "if I don't buy now, prices will go up even more," more people are signing contracts for new homes before selling their existing ones. A couple in their 40s near Jangja Lake Park signed a contract for a new home and then listed their current home for sale, increasing the asking price by 50 million won.

Sellers' Market

A view of Sanbon Raemian Hiers in Gunpo-si, Gyeonggi Province on the 25th. Photo by Lee Jungyoon

Similar trends were observed in Gunpo and Manan District of Anyang. With the "the more you regulate, the more prices rise" lesson learned from the Moon Jae-in administration, homeowners either pulled their listings or raised their asking prices.

For example, a 77-square-meter unit at Gaeseong High View in Gunpo was priced at 579 million won a month before the policy announcement, but was sold for 680 million won on the 18th, setting a new record high. The head of a real estate agency near Raemian Hiers in Gunpo said, "We received so many calls that the phone was practically on fire," adding, "Around 20 contracts were signed in just over a week." About 90% of these deals were gap investments.

In the neighboring Manan District of Anyang, the asking price for an 84-square-meter unit at Raemian Anyang Megatria also rose by about 50 million won. A 10th-floor unit of this size was sold for 970 million won the day after the policy announcement, marking the highest price in the past year. A realtor near this apartment said, "We were about to close a deal at 950 million won, but the seller raised the price by another 10 million won, so the deal fell through," adding, "Sellers are now holding out, expecting prices to rise further."

However, Songdo in Incheon, which was expected to benefit from the balloon effect as a non-regulated area, remained quiet for now. The head of a real estate agency near The Sharp Central Park in Songdo, Incheon, said, "Typically, we see reactions in Guri and Namyangju first, and then it spreads to Incheon," adding, "We expect to see more activity during the winter break season."

"Will There Be Additional Regulated Zones by Year-End?"

A panoramic view of the To-pyeong Village e-Pyeonhansesang Apartment Complex in Guri-si, Gyeonggi Province, on the 25th. Photo by Choi Seoyoon

As home prices soared within days of the policy announcement, anxiety spread that these areas might be designated as regulated zones (adjustment target areas or speculative zones) by the end of the year. Realtors in Guri said, "Every day is nerve-wracking. Please don't hype things up too much in the media."

Another realtor in a non-regulated area said, "While real estate agencies in Seoul are probably struggling, we're also on edge with every transaction. If this area ends up being regulated, everyone will be left with nothing to do," expressing concern.

Kim Gyucheol, Director General for Housing and Land Policy at the Ministry of Land, Infrastructure and Transport, said during a press briefing after announcing the real estate market stabilization measures on the 15th, "If the balloon effect intensifies, we will consider designating additional regulated zones."

Yoon Sumin, real estate specialist at NH Nonghyup Bank, said, "Not only gap investors but also actual homebuyers are flocking to non-regulated areas because they can't get loans in regulated zones," adding, "Since it is difficult to immediately increase supply and there are no special measures to curb demand, it is likely that the designated land transaction permit zones will be maintained for the long term."