Guri and Hwaseong See Clear Apartment Price Gains as They Escape Regulations... Seoul’s Growth Slows [Real Estate AtoZ]

Korea Real Estate Board Reports
Weekly Apartment Price Trends for the First Week of November

After the government designated all of Seoul and parts of Gyeonggi Province as regulated areas (adjustment target areas and speculative districts) and land transaction permit zones last month, apartment prices have risen sharply in regions that escaped these regulations. While transactions have slowed and a wait-and-see attitude has taken hold in regulated areas, leading to a deceleration in price increases, there are signs of a balloon effect as demand shifts to non-regulated regions.

According to weekly apartment price trends for the first week of November (as of the 3rd) released by the Korea Real Estate Board on the 6th, Guri City saw a 0.52% increase from the previous week. This marks the largest weekly increase in five years and four months since June 2020. Apartment prices in Guri have risen 0.91% so far this year, with more than half of the annual increase occurring in just one week.

Apartment complexes in downtown Seoul as seen from Namsan. Photo by Yonhap News Agency

Hwaseong, which includes the Dongtan New Town and has steady apartment demand, recorded a 0.26% increase, a sharper rise compared to the previous week’s 0.13%. This is the highest increase in Hwaseong in about one year and two months since August 2024. In Yongin, Suji District, which is subject to regulation, saw its increase slow to 0.22% from 0.31% the previous week, while Cheoin District (0.03%→0.06%) and Giheung District (0.05%→0.21%) experienced larger gains.

Park Wongap, Chief Real Estate Expert at KB Kookmin Bank, stated, "Capital naturally moves to places without regulations," adding, "Due to the balloon effect, we can expect higher-tier areas and price gap narrowing trends."

Areas designated as regulated are showing clear signs of a slowdown in price increases. In Seoul, except for Dongdaemun, all districts saw either reduced growth or stable prices. Overall, apartment sale prices in Seoul rose 0.19% from the previous week. After recording a historic weekly high of 0.50% as of October 20, the rate of increase has slowed for two consecutive weeks (0.23%→0.19%).

The adjustment target areas and speculative districts have been in effect since the 16th of last month, and land transaction permit zones since the 20th. Prices peaked before and after the government’s measures were announced and have since been declining. In newly regulated areas along the Han River-such as Seongdong District (0.37%→0.29%), Gwangjin District (0.20%→0.15%), Mapo District (0.32%→0.23%), and Yeongdeungpo District (0.37%→0.26%)-the rate of increase has uniformly shrunk.

Several urgent sale notices are posted at a real estate office near Suraksan Station in Nowon District. Photo by Yonhap News

In Songpa, Dongjak, Gangdong, and Yangcheon districts, the pace of increase has slowed but remains relatively high. In areas such as Gangbuk, Dobong, Nowon, and Jungnang, where the price increases were not significant even before the measures, changes have been minimal. The Korea Real Estate Board explained, "With fewer purchase inquiries and transactions, market participants continue to take a wait-and-see approach. However, price increases in complexes undergoing reconstruction have led to overall gains in Seoul."

According to the Ministry of Land, Infrastructure and Transport’s actual transaction system, the number of apartment transactions in Seoul over the three weeks following the announcement of the measures on October 15 was 1,673 (based on contract date). Considering that the number of transactions in the three weeks prior to the announcement reached 8,264, this represents a reduction to one-fifth of the previous level. This is attributed to the tightening of various loan regulations and the impact of mandatory self-occupancy requirements. In land transaction permit zones, buyers must also undergo approval procedures from local governments to purchase apartments.

The market expects the wait-and-see stance to continue for the time being as it observes the ripple effects of the new measures. Park commented, "After a sharp surge, prices are likely to plateau for a while-a 'plateau phenomenon' that was often seen during the US real estate bubble period." He added, "Buyers are waiting to see the effects of the measures, while homeowners are reluctant to sell properties with tenants and see no reason to sell at a discount, reflecting a loss-aversion mindset."