"No Jeonse, So Let's Buy Fast"... Prices Surge in These Seoul Areas Under 1 Billion KRW [Practical Investment Technique]

Mimisam, 23-Pyeong Units Asking 1.2 Billion Won
Actual Transaction Price Up 85 Million Won in Six Months
Sangye Jugong Complexes 3 and 6, 20-Pyeong Units Listed at 800 Million Won
Affordable Redevelopment Complexes Gain Popularity Amid Jeon

Recently, a combination of strict lending regulations and a decrease in jeonse (long-term rental) listings has driven up the asking prices for reconstruction apartment complexes in the Nowon-gu area. Newlywed couples and young people seeking to take advantage of first-time homebuyer benefits are hurrying to secure a high-quality single property, leading to increased demand for cost-effective reconstruction complexes priced under 1 billion KRW (approximately 1 million USD). Experts advise that when investing in reconstruction apartments, it is important to consider both the burden of additional contributions and the pace of the redevelopment project.

Mimisam Asking Price Surpasses 1.2 Billion KRW...Sanggyejugong Complex 3 Draws Attention for Breaking Previous Highs

According to the Ministry of Land, Infrastructure and Transport’s real transaction price disclosure system on January 14, Wolgye Shiyeong Apartment (Miryung, Miseong, Samho 3rd) - a representative reconstruction complex in Nowon-gu - saw a 59-square-meter (23-pyeong, Samho 3rd) unit sell for 945 million KRW last month, setting a new record high. This marks an increase of 85 million KRW in just about six months, as the same unit traded for 860 million KRW in June of the same year. Local real estate agencies report that there was even a transaction at 980 million KRW that has yet to be officially reported in the real transaction system.

A view of Wolgye Shiyeong Apartment in Wolgye-dong, Nowon-gu. Naver Real Estate

Wolgye Shiyeong Apartment is a large-scale complex with 3,930 units and is now entering its 40th year since completion. Buildings 1-16 are Miseong, 17-23 are Miryung, and 24-32 are Samho 3rd, collectively referred to as “Mimisam” from the initials of each section. The complex has completed its maintenance plan proposal, and after reconstruction, it is expected to be reborn as a development with up to 40 floors and 6,700 units. The area is also expected to benefit from the “Kwangwoon University Station Area Development Project,” led by HDC Hyundai Development Company, which includes a large-scale shopping mall and residential complex, as well as the upcoming opening of the GTX-C (Greater Seoul Metropolitan Express Railway Line C). These dual positive factors are raising expectations for the region.

On-site, inquiries from potential buyers continue to pour in. The head of a real estate agency in Nowon-gu stated, “Even though gap investment has been blocked since the October 15 policy, and only end-users can buy, the number of inquiries has not decreased at all. Buyers are eager to see homes, but with asking prices rising so quickly, it is becoming difficult to show available listings.”

As investment demand has surged, asking prices have also jumped. Currently, two 23-pyeong Samho 3rd units are listed on the market for 1.15 billion KRW and 1.25 billion KRW, respectively. Local real estate agencies note that there was a unit that entered into a preliminary contract for over 1.1 billion KRW this month, and they do not consider the current asking prices to be excessive.

The Sanggyejugong reconstruction complex, considered the flagship redevelopment project in Nowon-gu, is also experiencing heightened activity. Complex 3, which has begun formulating its maintenance plan, saw a 24-pyeong (58-square-meter) unit sell for 775 million KRW last month, setting a new record high. Currently, a unit is listed at an asking price of 870 million KRW. Complex 3 is a large-scale apartment complex with over 2,000 units and is located adjacent to Nowon Station on subway lines 4 and 7, making it one of the most desirable locations in Sanggye-dong. This unit type had remained in the 700 million KRW range for a long period after peaking at 855 million KRW in August 2022. The asking price for a 24-pyeong (58-square-meter) unit in Sanggyejugong Complex 6 has also risen to 800 million KRW. This unit type set a new record high with a transaction at 705 million KRW on January 9 of this year.

Lending Limits Reduced and Jeonse Listings Locked Up...Newlyweds and Young People Rush to Buy

Experts believe that the government’s stringent lending regulations have concentrated investment demand in Nowon-gu’s reconstruction complexes. Under the government’s June 27 lending restrictions, the maximum limit for mortgage loans is capped at 600 million KRW, and the loan-to-value (LTV) ratio has been reduced to 40%. As a result, investors with limited cash reserves are turning their attention to cost-effective properties priced below 1 billion KRW. In fact, according to Zigbang, from November 29 of last year to January 7 of this year, there were 615 land transaction permit applications in Nowon-gu, representing a 117% increase compared to the previous period (October 20 to November 28).

Yoon Sumin, Real Estate Specialist at NH Nonghyup Bank, said, “Buyers with limited cash reserves are seeking reconstruction complexes where they can expect investment efficiency for under 1 billion KRW, which is why Nowon-gu is attracting attention. Reconstruction complexes in the Nodobang area, where price increases have been slow, are now being seen as undervalued properties.”

The decrease in jeonse listings is also cited as a factor stimulating buying demand. According to real estate platform Asil, as of January 12, there were 22,702 apartment jeonse listings in Seoul, a 27.5% decrease compared to the previous year. With gap investment restricted after the October 15 policy, the supply of jeonse units has shrunk, prompting young people and newlyweds facing housing shortages to utilize first-time homebuyer benefits and enter the market. The head of real estate agency B in Nowon-gu said, “Most people inquiring about older complexes slated for reconstruction are newlyweds. With no jeonse listings available and home prices rising, they are anxious and come to real estate agencies saying they need to buy a home quickly.”

However, experts advise considering the burden of additional contributions and the pace of the redevelopment project. Previously, Sanggyejugong Complex 5 experienced difficulties, including contract cancellations with construction companies, after a contribution of over 500 million KRW was announced. Yoon added, “Redevelopment projects can take longer than expected. It is also important to assess whether you have the financial capacity to handle increased contributions in the future.”