After the October 15 Policy: Buying Sentiment Cools in Nowon Redevelopment Complexes

Restrictions on Gap Investments Reduce Listings
Asking Prices for Owner-Occupied Units Rise
Buyers Largely Shift to Wait-and-See Mode

"We occasionally get inquiries from buyers, but they tend to walk away when the price isn't what they expected," said a realtor near Sanggye Jugong Apartment Complex 6.

On December 1, the Sanggye Jugong Apartment Complex near Nowon Station was visited. In this area, Sanggye Jugong Complexes 3, 6, and 7 are situated facing each other, centered around Nowon Station on subway lines 7 and 4. The real estate agencies lined up along the complexes were all empty, with no customers in sight. Over a two-hour period, only two agencies received phone inquiries. In both cases, as soon as the asking price was mentioned, the calls ended in less than five minutes.

Sanggye Jugong Apartment Complex 3 and Complex 6. Photo by Lee Ji-eun

Following the October 15 policy, which designated all of Seoul as a land transaction permit zone and a speculative overheated district, there has been a noticeable decline in buying interest, especially in early-stage redevelopment complexes preparing to establish associations. With restrictions on gap investments reducing the number of listings, homeowners have raised their asking prices, causing buyers to adopt a wait-and-see approach.

According to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system on December 2, there were 21 apartment sales contracts in Nowon District from October 20, one month after the land transaction permit zone was announced, to December 2. This represents an 84.2% decrease compared to the same period last year, when there were 133 transactions. Even considering the 30-day reporting deadline after the main contract is signed, the decline is significant.

Transaction volume has dropped noticeably, particularly in older redevelopment complexes. This is attributed to the double impact of regulations capping loan limits at 600 million won and the designation of land transaction permit zones.

In Complex 6, which boasts excellent access to commercial areas like Lotte Department Store, a 24-pyeong (58 square meter) unit was sold for 655 million won on October 18. Currently, a 24-pyeong unit in Complex 6 is listed at a maximum asking price of 750 million won. As the number of available units ready for occupancy has decreased and asking prices have risen, buyer inquiries have dried up. The head of a nearby real estate agency commented, "Compared to before the October 15 policy, transactions have dropped by two-thirds. With only a few properties available for actual residence and homeowners raising prices, even interested buyers are walking away."

Transaction activity is similarly sluggish in Sanggye Jugong Complex 7, which is located near the Changdong and Sanggye development sites. A 24-pyeong (58 square meter) unit in Complex 7 set a new record at 732 million won on September 23. The highest current asking price is 750 million won. The head of a local real estate agency in Complex 7 said, "Since the end of last month and into December, the number of transactions has dropped sharply, with each agency in the area only applying for one or two land transaction permits. Compared to September, when phone inquiries and contract signings were at their peak, activity has fallen by about 20%."

However, some transactions are still taking place in Complexes 1, 2, and 4, which mainly consist of smaller units. Unlike Complexes 3, 6, and 7, where 20-pyeong units are predominant and prices have surpassed 600 million won, these smaller-unit complexes can still be purchased for under 600 million won. The head of a real estate agency near Complex 4 explained, "Actual buyers in their 20s and 30s are flocking to smaller-unit complexes, aiming for the 600 million won policy loan ceiling, even if it means enduring tight living conditions. For the 20-pyeong complexes, where prices have already exceeded 700 million won, the combination of the 600 million won loan cap and the policy loan ceiling has caused buying demand to drop sharply."

Experts believe that the first half of next year will serve as a barometer for whether the contraction in buying sentiment will persist. Yoon Sumin, a real estate expert at NH Nonghyup Bank, stated, "Currently, the market has an extremely limited supply of properties available for actual residence, making it a difficult time for buyers to enter. Many are hesitating to take out loans and make a risky entry into the market." He added, "Only after properties suitable for actual residence come onto the market in the first half of next year will we be able to determine whether the impact of the October 15 policy on buying sentiment is lasting or just temporary."