Apartment prices continue to rise despite government efforts
Apartment prices are soaring in Seoul despite the government's efforts to control prices as expectations for massive redevelopment are on the rise.
“Seoul apartment prices are constantly picking up, even rising higher than pre-by-election levels,” said Finance Minister Hong Nam-ki on May 6, during a ministerial conference on the housing market. “Concerns about price increases in the four Gangnam area – Gangnam, Seocho, Songpa and Gangdong Districts – are continuing to grow.”
Seoul mayor Oh Se-hoon seems to be tightening real estate regulations as he believes that the market must be stabilized first in order for eased redevelopment regulations to have an effect.
Oh announced on April 21 that Apgujeong-dong, Yeouido, Mok-dong and Seongsu-dong will be designated as “land transaction permit zones” from April 27. Those who wish to purchase houses in the four areas need permission from the head of the district office. Renting out properties is prohibited for two years as a move to prevent speculation.
Last-minute apartment buying sprees were rampant in the designated areas, as investors got in under the wire before the new rules went into effect.
With stricter regulations, speculative buying of real estate for redevelopment in Nowon District, northern Seoul, is becoming increasingly popular. According to Dawin Property, a real estate brokerage firm, there are 86,147 apartments in Nowon District that were built more than 25 years ago. Of those apartments, 41,329 are located in Sanggye-dong, Nowon District.
“Buying and selling apartments in areas such as Apgujeong-dong, Yeouido, Mok-dong and Seongsu-dong has become difficult, and many turned to purchasing redevelopment apartment complexes in Nowon District instead,” said a real estate agent in Sanggye-dong.
Apartment prices in Gangnam, Seocho and Songpa are also rising fast. According to Korea Real Estate Board, prices of apartments in Seocho and Songpa as of May 3 increased 0.15 percent on week. Apartment prices in Gangnam rose 0.14 percent on week.
Yeongdeungpo and Yangcheon District apartment prices rose 0.15 percent and 0.12 percent on week, respectively.
Looking at greater Seoul in general, apartment prices rose 0.27 percent on week, higher than last week’s increase of 0.26 percent. Incheon apartment prices were up 0.55 percent on week, higher than last week’s 0.51 percent. Gyeonggi prices rose 0.3 percent, lower than last week’s 0.31 percent.
Based on cumulative data from January to May 3, apartment prices in Songpa rose 2.21 percent on year, Nowon 1.97 percent, Gangnam 1.84 percent and Seocho 1.81 percent.
The government plans to go forth with their housing supply plan announced on February 4. According to the Ministry of Economy and Finance, some 500,000 houses will be built nationwide this year. Of the 500,000, 362,000 to 391,000 will be private rental apartments, 92,000 will be public rental apartments and 30,000 will be provided by apartment subscription.
“Total housing supply this year, including public and private housing and apartment subscriptions, will be a record amount,” said Hong.
Apartment purchases by people moving from one area to another during the first quarter hit an all-time high, according to real estate data platform 10,000-lab. These purchases include speculative buyers.
Some 27 percent of the total apartment transactions nationwide in the January-to-March period were by people moving from one area to another. This is a 2.3 percent point increase from fourth quarter of last year and the highest since 2006, when the data were first collected.
By city and province, these apartment purchases were highest in Sejong, at 49.1 percent, South Chungcheong, at 41.1, Incheon 36.7 percent, Gangwon 34.4 percent, North Chungcheong 33.4 percent, Gyeonggi 28.6 percent and North Jeolla 25.9 percent.
“Hype of apartment prices are not only affected by purchases by actual residents, but also by increase of speculative demand from real estate investors,” said Hwang Han-sol, a researcher at 10,000-lab.
BY KIM WON, IM SOUNG-BIN [email@example.com]