Loan interest rate and small-sized ‘Nodogang’ with many buyers… ‘Gap investment’ targeting reconstruction windfall
“Gangnam District 3, from March to June when ‘Mayongseong’ was in full swing, was still there, but transactions increased in July. Inquiries were steady even in August when there was a vacation period.” (Mr. A, a real estate agent in Gangbuk District, Seoul)
As the apartment market in Seoul’s core areas heats up, the buying fever is spreading throughout Seoul. As asking prices jumped significantly in the three Gangnam districts and ‘Mayongseong’ (Mapo, Yongsan, and Seongdong districts), buying power seems to be moving to the ‘Nodogang’ (Nowon, Dobong, and Gangbuk districts) area, where housing prices are relatively cheap. Real estate agents we met on site said, “June and July were the most active months this year,” and “All the reasonably priced properties that had been piling up for a year were sold out in a month or two.”
As the government tightens lending and moves to ‘hold down housing prices,’ housing prices have been rising for 23 consecutive weeks through the fourth week of August, and more and more buyers are turning their attention to apartments priced under 900 million won or smaller in the Seoul real estate market.
“All the cheap properties are sold out”
Real estate market insiders whom the reporter met in the Nodogang area on September 2 reported that they have recently felt an increase in transactions. Nowon-gu certified real estate agent B said, “In June and July, we had four or five transactions per month,” and “There are about 10 real estate agencies nearby, which is a lot for apartment transactions.” He added, “You could say that all the properties that were listed at low prices have already been sold.”
Major apartment complexes in the Nodogang area, which have many apartments under 900 million won, have seen an increase in transaction volume. The Daejang apartment complex in Gangbuk-gu, ‘SK Bukhansan City’, increased from 6 transactions in January to 27 in July. Dobong-gu’s ‘Dobong Hanshin’ also increased from 5 in January to 16 in July. Gangbuk-gu apartments were also included among the 22 complexes in Seoul that had more than 100 transactions from January to September.
According to the analysis results of the Ministry of Land, Infrastructure and Transport’s real transaction price system, the transaction proportion of apartments in the Seoul area with a sale price of 400 million to 900 million won has been on the rise since July. The transaction proportion decreased to 40.7% in April, 38.1% in May, and 35.4% in June, but increased to 36.6% in July and 43.2% in August.
In the Nodogang real estate market, it was analyzed that people in their early to mid-30s led apartment transactions. Real estate agent A from Gangbuk-gu said, “More than half of the customers who inquire about purchasing are newlyweds or couples with newborns.” Real estate agent C from Dobong-gu said, “Since it is close to the subway station, many young people come here on weekends because of the location,” and “In July, many sales took place in remodeled areas.”
Experts cited the “balloon effect” due to the burden of loans as the reason for the increase in transactions for small apartments priced under 900 million won in the Nodo River area. Yoon Su-min, a real estate expert at Nonghyup Bank, explained, “The outskirts of Seoul, especially Nodo River, are areas where actual demand for housing is stronger than for investment,” and “There are definitely people who are trying to buy houses even if it means using as much as possible in loans.” Yoon added, “Now that the policy of lowering the loan limit is in place, the ability to purchase is actually decreasing.”
“The higher the loan interest rate, the more people flock to small apartments”
In the Nodong River real estate market, there is talk that government loan policies and loan interest rates affect purchasing sentiment. Mr. Choi, a certified real estate agent in Gangbuk-gu, said, “The Gangnam 3-gu and Mayongseong areas may be less affected by loans because people with enough cash move in, but this area is different,” and explained, “Government loan policies and interest rates, such as ‘special supply for newborns’ and newlywed loans, affect purchasing sentiment. As loan interest rates rise, people turn to the cheaper Nodong River area or small apartments.” As of July, the number of apartment transactions in Nowon-gu increased by about 60% compared to the previous month, reaching 722 cases, while Dobong-gu and Gangbuk-gu increased by 36% and 30%, respectively.
The redevelopment windfall in the Nodo River area is also having an impact. A certified real estate agent in Nowon-gu said, “Some people come here with the long-term goal of redevelopment, but some come here to make a profit in the short term,” and “The amount jumps by tens of millions of won each time the redevelopment stage goes up, but here, the gap investment ratio and the purpose of actual residence seem to be about 4 to 6.” The increase in gap investment in the Nodo River is also reflected in statistics. According to data submitted to Rep. Cha Gyu-geun of the Democratic Party of Korea by the Ministry of Land, Infrastructure and Transport on September 1, the number of suspected gap investment housing purchases in the Nodo River in July significantly increased from 17 cases (13 billion won) in July last year to 43 cases (36 billion won) in July this year.
In August, the rate of increase in apartment prices in Seoul slowed, but in Dobong-gu and Nowon-gu, the rate of increase actually increased. In Dobong-gu, the rate of increase in apartment prices rose from 0.1% the previous week to 0.12%, and in Nowon-gu, from 0.12% to 0.17%. A certified real estate agent in Gangbuk-gu said, “Compared to downtown Seoul, apartment prices may not have risen much, but considering the actual transaction prices here, I think the movement of tens of millions of won is significant.”
In some complexes in Nodogang, there are cases where the price is rising and breaking the record. The exclusive area of 84㎡ in Nowon-gu’s ‘Ha-gye 1-cha Cheong-gu’, which was sold for 840 million won in August, is currently priced from 850 million won to 930 million won. The exclusive area of 121㎡ in Dobong’s ‘Changdong Shindobrane 1-cha’ was sold for 1.01 billion won in August, breaking the previous record of 899 million won.
Commissioner Yoon Su-min said, “It seems that the loan regulations currently introduced will play their role in the remaining second half of the year,” adding, “However, since loan regulation policies can have an impact on the market in the short term, the effect gradually weakens, so the effect of loan regulations aimed at blocking demand this time too will not last for a long time.”
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Reporter Yoon Chae-won [email protected]
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2024-09-08 04:09:29