"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 stringent loan regulations and a decrease in jeonse (long-term rental) listings has caused asking prices for reconstruction complexes in the Nowon-gu area to surge. Newlywed couples and young people, who can take advantage of first-time homebuyer benefits, are rushing to secure a "smart single property," leading to strong demand for cost-effective reconstruction complexes priced under 1 billion won. Experts advise that when investing in reconstructed apartments, buyers should carefully consider the burden of additional contributions and the pace of the development project.

MimiSam Asking Prices Reach 1.2 Billion Won... Sanggye Jugong Complex 3 Draws Attention After Surpassing Previous Highs

According to the actual transaction price disclosure system of the Ministry of Land, Infrastructure and Transport 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 won last month, setting a new record. After being traded at 860 million won in June of the same year, the price jumped by 85 million won in just about six months. Local real estate agencies reported that there was also a transaction at 980 million won that has not yet been reflected in the official records.

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, now entering its 40th year since completion. Buildings 1 to 16 are called Miseong, 17 to 23 are Miryung, and 24 to 32 are Samho 3rd. The complex is collectively referred to as "MimiSam," derived from the initials of each section. The area has completed its maintenance plan proposal. After reconstruction, it is expected to be reborn as a complex with up to 40 floors and 6,700 units. The area is also anticipating a double boost, as HDC Hyundai Development Company is pursuing the "Kwangwoon University Station Area Development Project," which includes a large-scale shopping mall and residential complex, and the opening of the GTX-C metropolitan express railway line is also on the horizon.

On-site, inquiries from buyers continue to pour in. The owner of a real estate agency in Nowon-gu said, "Even after the October 15 measures, which restricted gap investment, inquiries from buyers who need to live in the property have not decreased at all. Buyers are eager to view homes, but with asking prices rising rapidly, it's becoming difficult to show available listings."

As investment demand has surged, asking prices have also risen. Currently, two 23-pyeong units in Samho 3rd are listed at 1.15 billion won and 1.25 billion won, respectively. Local real estate agents say that there was a unit that entered into a preliminary contract at around 1.1 billion won this month, and they do not believe current asking prices are excessively high.

The Sanggye Jugong reconstruction complex, regarded as the flagship redevelopment project in Nowon-gu, is also experiencing heightened activity. Complex 3, which has begun establishing its maintenance plan, saw a 24-pyeong (58-square-meter) unit trade for 775 million won last month, setting a new record. Currently, a unit is listed at an asking price of 870 million won. Complex 3 is a large-scale apartment complex with over 2,000 units, located adjacent to Nowon Station on subway lines 4 and 7, making it one of the most sought-after locations in Sanggye-dong. This particular unit size reached a peak of 855 million won in 2022 but had remained in the 700 million won range for an extended period. In Sanggye Jugong Complex 6, the asking price for a 24-pyeong (58-square-meter) unit has also risen to 800 million won. This unit size set a new record when it changed hands for 705 million won on the 9th of this month.

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

Experts believe that the government's stringent loan regulations have driven investment demand into Nowon-gu's reconstruction complexes. Under the government's June 27 loan restrictions, the mortgage loan limit has been capped at 600 million won, 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 under 1 billion won. 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, a 117% increase compared to the previous period (October 20 to November 28).

Yoon Sumin, a real estate expert at NH Nonghyup Bank, stated, "Buyers with limited cash reserves are seeking reconstruction complexes where they can expect investment efficiency for less than 1 billion won, which is why Nowon-gu is drawing attention. Reconstruction complexes in the Nodogang area, where price increases had been sluggish, are now being recognized as undervalued properties."

The decrease in jeonse listings is also cited as a factor stimulating buying demand. According to the 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 measures, the supply of jeonse units has dwindled, prompting young people and newlyweds facing housing shortages to use first-time homebuyer benefits to purchase homes. The owner of a real estate agency in Nowon-gu said, "The majority of inquiries about older complexes awaiting reconstruction come from newlyweds. With no jeonse listings and rising home prices, they feel anxious and are coming to real estate offices saying they need to buy a home quickly."

However, experts recommend considering the burden of additional contributions and the pace of the development project. For example, Sanggye Jugong Complex 5 faced difficulties, including contract cancellations with the construction company, after additional contributions of around 500 million won were announced. Yoon added, "Redevelopment projects can take longer than expected. It is also important to assess whether you have sufficient financial capacity to handle any future increases in additional contributions."