Transaction Volume in Gyeonggi LTPZs Like Gwacheon and Bundang Plummets from 3,185 to 17... Gangnam and Unregulated Areas See Increase [Real Estate AtoZ]

Transaction Volume Plunges 99% in 12 Gyeonggi LTPZs
Seoul’s Newly Designated LTPZs See Similar Declines
Confusion Grows as Officials Struggle with Permit Process
Gangnam, Songpa, and Unregulated Gyeonggi Areas See Volume Rise
"Liquidit

Following the government's October 15 real estate policy, transactions have virtually disappeared in 33 newly designated land transaction permit zones (LTPZs) in Seoul and Gyeonggi Province. Because it now takes nearly a month to complete a contract, transactions are no longer being reflected in the statistics. In addition, some demand has shifted in two directions-toward the existing regulated areas such as the three Gangnam districts and toward non-regulated areas-further accelerating the decline in transaction volume.

Yonhap News Agency

According to the Ministry of Land, Infrastructure and Transport's actual transaction price system as of November 6, the number of transactions in the 12 newly designated LTPZs in Gyeonggi Province totaled just 17 from October 20 to November 4, a 15-day period. This represents a 99.5% decrease from the 3,185 transactions recorded during the previous 15-day period (October 5-19) before the designation. In nine areas-including Gwacheon, Uiwang, Hanam, Bundang, Sujeong, and Jungwon districts in Seongnam, Hanam, Dongan district in Anyang, and Jangan district in Suwon-there were no transactions at all.

In Seoul, the 21 newly designated LTPZ districts also saw transaction volume plummet by 97.8%, from 4,585 to 102 during the same period. The main reason appears to be delays in transaction processing due to the introduction of the land transaction permit procedure. In LTPZs, after the buyer and seller agree on contract terms, they must prepare the necessary documents and submit them to the relevant city, county, or district office. The relevant departments then conduct consultations and investigations before granting or denying the permit. Only after receiving approval can the contract be finalized.

According to the office of Assemblyman An Taejun, each of the 12 LTPZs in Gyeonggi Province has only one staff member in charge, who is also handling other work. While the situation in Seoul is slightly better, it is not significantly different. Considering the permit process and the 30-day deadline for reporting actual transactions, contracts in the newly designated LTPZs are not expected to appear in earnest until mid-November.

Yoon Sumin, a real estate expert at NH NongHyup Bank, commented, "The newly designated LTPZs lack staff with experience in related work, and the shortage of personnel means contracts will take over a month to complete. It will take some time before these are fully reflected in the transaction statistics." She also noted, "While the impact of the LTPZs is the biggest factor, some liquidity is also shifting to non-regulated areas and to Gangnam, further contributing to the decline in transaction volume."

Meanwhile, the three Gangnam districts and Yongsan district, which have been under LTPZ restrictions since March, are actually seeing an increase in transactions. During the 15 days from October 20 to November 4, the total number of transactions in these four districts was 271, a 22.1% increase from the 222 transactions in the previous 15-day period. During this period, Songpa district saw a 36.8% jump from 114 to 156 transactions, and Gangnam district rose 28.3% from 46 to 59. Seocho district (-11.4%) and Yongsan district (-5.6%) saw slight declines, but these figures are far better than the more than 97% drop seen in the newly designated LTPZs.

Yoon explained, "If buyers are subject to the same regulations, there is a psychological tendency to prefer Gangnam. Currently, the Gangnam apartment market is being driven by demand from those trading up from areas along the Han River belt, such as Mapo and Seongdong districts."

Transaction volume in non-regulated areas of Gyeonggi Province, where a 'balloon effect' was anticipated, also increased by 15.5% during the same period, rising from 3,353 to 3,872. Looking at regions with over 100 transactions, Gwangju city surged 77.8% from 72 to 128, and Hwaseong city climbed 58.4% from 454 to 719. Paju city (31.5%), Wonmi district in Bucheon (21.5%), and Gwonseon district in Suwon (19.3%) also posted significant increases.

Except for Paju, these areas recently recorded notable weekly price increases in the Korea Real Estate Board's weekly apartment price statistics for the fourth week of October. Gwangju and Hwaseong each posted their highest weekly increases of the year (Gwangju 0.14%, Hwaseong 0.13%). Gwonseon district in Suwon (0.08%) and Wonmi district in Bucheon (0.05%) also recorded their highest increases since June and February, respectively. In Paju, prices actually fell by 0.06% recently, but local real estate agents report that there is an upward trend centered on Unjeong New Town.

Yang Jiyeong, a real estate expert at Shinhan Premier Pathfinder, said, "Gangnam has already adapted to the regulations and is unaffected, while liquidity that had been concentrated in the Han River belt districts like Mapo and Seongdong is returning. At the same time, a dual trend is emerging with the balloon effect in non-regulated areas." He added, "The paradox of regulation, where successive regulations only further distort the market, is likely to persist for the time being."