After Mayongseong, It's 'Gil'... Gireum New Town Apartment Prices Surge

Raemian Complex 6, 31-Pyeong Units Now Asking 1.6 Billion Won
Properties Under 1.5 Billion Won in High Demand Due to Lending Regulations
Sellers Withdraw Listings and Raise Asking Prices

Following the October 15 policy that designated the entire city of Seoul as a Land Transaction Permit Zone, apartment prices in the Gireum New Town area of Seongbuk District have continued to hit record highs. Due to the impact of stricter loan regulations, investment demand has concentrated on properties priced at 1.5 billion won or less, where up to 600 million won in mortgage loans is still available. As a result, buying activity has been focused in the Gireum New Town area.

According to the Ministry of Land, Infrastructure and Transport’s actual transaction price disclosure system on January 20, a 31-pyeong (84 square meter) unit in the Gireum Raemian Complex 6 changed hands last month for 1.26 billion won, setting a new record high. After being sold for 1.17 billion won in October of the same year, the price jumped by nearly 100 million won in just two months. Local real estate agencies report that a unit, whose transaction has not yet been officially registered, was traded for 1.425 billion won in mid-January. As actual transaction prices have surged, the asking price for this unit type has now soared to as high as 1.6 billion won.

The Lotte Castle Classia, considered the flagship apartment complex of Gireum New Town, has also seen a sharp rise in actual transaction prices. A high-floor 25-pyeong (59 square meter) unit in this complex was sold last month for 1.4 billion won, setting a new record. After a similar high-floor unit was traded for 1.3 billion won in September of the same year, the price increased by 100 million won in just three months. According to local real estate agencies, another 25-pyeong unit was sold this month for 1.46 billion won, breaking the previous record. Currently, the asking prices for 25-pyeong and 32-pyeong (84 square meter) units have risen to 1.7 billion won and 1.8 billion won, respectively. In a nearby complex, Raemian Gireum Centerpiece, a 35-pyeong (84 square meter) unit also set a new record when it was sold for 1.63 billion won in October last year.

Apartment complex in Gireum New Town (The Asia Business Daily DB)

The upward trend in prices has spread to older apartment complexes in the area as well. Dongbu Centreville, which is now 23 years old, reportedly saw two 33-pyeong (84 square meter) units in the 900 million won range and one unit in the 1 billion won range all sold this month.

As prices have surged, homeowners are withdrawing listings and raising their asking prices. The manager of Real Estate Agency A in Gireum New Town explained, "Recently, a buyer expressed interest in purchasing a 31-pyeong unit in Gireum Raemian Complex 6 for 1.5 billion won, but the homeowner withheld the sale and raised the asking price to 1.6 billion won."

There have even been unusual situations where homeowners refuse to provide account numbers, insisting on selling only at record-high prices. The manager of Real Estate Agency B near Gireum New Town said, "A buyer recently offered 1.5 billion won for a 25-pyeong unit in Lotte Castle Classia, but the homeowner refused to provide the account number and instead raised the asking price. In this area, it's become a running joke that the market is now being called 'Mayongseong-gil'-on par with Mapo, Yongsan, and Seongdong districts-because sellers are holding off on transactions and raising prices whenever a buyer appears."

Experts believe that, as stricter loan regulations have reduced the purchasing power of buyers, investment demand has concentrated in Gireum New Town, where it is still possible to purchase new apartments priced at 1.5 billion won or less. Previously, the government had set a cap through the October 15 policy, allowing mortgage loans of up to 600 million won only for homes traded at 1.5 billion won or less.

Yoon Sumin, Real Estate Specialist at NH Nonghyup Bank, analyzed, "Recently, the real estate market has seen lower-priced areas catching up with last year's sharp increases in prime locations. In the case of Gireum New Town, last year's price growth for new apartments was relatively slow, and because the area serves as a residential base for commuters, investment demand is now pouring in."

Real Estate Agency C in the Gireum New Town area stated, "Most of the recent inquiries we receive are from people in their 30s and 40s looking to purchase their first home. Many are rushing to buy homes as their lease periods expire."