[조영광의 빅데이터 부동산] Railroad projects scheduled to begin and open will continue even if the government changes.
The new year has arrived, but the political risks that have struck the Republic of Korea are not going away easily. Government policy and the real estate market are inseparable. This is why the dream of owning a home and investment prospects are bound to fluctuate depending on future political trends. Based on real estate big data, we analyzed the expected policy direction for each political scenario and the resulting market impact. Furthermore, we also looked at real estate good news that is relatively less volatile despite political risks.
Private-friendly supply vs. expansion of public and rental housing
It is impossible to predict whether the impeachment of President Yoon Seok-yeol will be upheld by the Constitutional Court. However, political changes and resulting real estate policy scenarios following impeachment approval or dismissal can be predicted. If the impeachment of President Yoon becomes a reality and an early presidential election is held, two major situations will arise. First of all, this is the case when the conservative party is in power. Then, it is highly likely that the Yoon Seok-yeol government’s ‘private-friendly supply policy’ will continue. In the case of downtown Seoul, the Special Reconstruction Act will be applied, and additional new housing sites will be announced in Incheon and Gyeonggi. If realized, the foundation for housing supply could be laid by 2030 at the latest. Furthermore, it is highly likely that the station area improvement project, which has been approved for a floor area ratio of 300% in accordance with the Special Reconstruction Act, will attract the attention of investors. Places where new residential land is planned will see a halo effect as the probability of a metropolitan railway network being built will increase.
If the progressive party takes power, ‘basic housing’, which has been consistently raised, is expected to become a major policy topic. The goal is to provide housing that everyone can live in for a long period of time at a price that is affordable to everyone. Accordingly, government-led public and rental housing programs can be restarted. In addition to the 3rd new town, Gimpo Hangang 2, Pyeongtaek Site, and Guri Topyeong, which were announced as candidates for housing sites in the metropolitan area by the current government, will be developed mainly for public and rental housing. In this policy environment, young people and newlyweds who do not own a home, who can receive high subscription points, have greater opportunities to move into prime locations in the metropolitan area. On the other hand, dual-income couples without a home, the so-called sandwiched subscription group, will be in the blind spot of subscription and will have a hard time. Furthermore, as the ‘good sale price’ policy gains momentum again, cost pressure on construction companies is expected to increase. The high price situation remains the same, and with the ZEB (Zero Energy Building) mandate coming into effect in June, the increase in construction costs may increase. In areas where supply does not support demand, a surge in prices will be inevitable after the second half of this year.
If President Yoon returns due to the failure of impeachment, political instability could rise to the extreme. Political risk will encroach not only on real estate but also on all economic and social issues. As real estate policy is pushed to the bottom of the list, the market’s wait-and-see attitude may turn to indifference. Even in the recent low-growth phase where the gross domestic product (GDP) growth rate is less than 3%, house prices in Gangnam have been rising as if mocking this. This is because a structural downturn in housing transactions and a decrease in supply have pushed up house prices. However, if political instability shakes Korea’s economic mechanism itself, an unprecedented situation will unfold where an economic recession will push the real estate market down.
Increase in value of areas near tram and light rail stations
Meanwhile, there are two real estate policies that both conservatives and progressives will benefit from, which are attracting attention. First of all, the ‘Special Act on Aging Planning and Cities’ is promoted. Even in an era of population decline, the influx of people into new cities is increasing. In that respect, the number of candidate sites subject to the Special Act on Aging Planning and Cities, targeting densely populated election ticket fields, may increase. However, the variable is whether or not this policy is realized early. For example, many metropolitan rapid transit (GTX) route blueprints have been released every election season, but only now are some of the GTX-A routes opened. Likewise, the first new city precinct was announced in November last year, but considerable difficulties are expected in the actual supply. As with any other redevelopment project, the first phase of new town reconstruction will involve various claims from stakeholders such as apartment and commercial building owners and tenants. In addition, the calculation method of the Ministry of Land, Infrastructure and Transport, Korea Land and Housing Corporation (LH), and local governments is also complicated. The Seondo district project, which aims to complete reconstruction within 5 years, which normally takes more than 10 years, will not be all sailing.
Another real estate policy worth paying attention to amidst political instability is various railway infrastructure projects. In particular, the railway project, which is about to start and open, is expected to be promoted even if the government changes in the future. In that respect, 2025 will be the first year of the ‘Urban Rail 2.0 Era’ represented by trams. Trams are more punctual than buses and cars, and have less construction costs than subways. This is the background to the fact that trams are in the spotlight as a subway alternative that will open the era of Urban Rail 2.0. In that respect, tram development projects with a clear cause are likely to enjoy a reverse premium in the current political instability situation.
First of all, the completion rate of trams in Wirye New Town, a new town in the Gangnam area, is currently at 90%, with the goal of completion within the year and opening next year. As a result, residents of Wirye New Town will be able to transfer to the tram between Macheon Station on Seoul Subway Line 5 and Bokjeong Station and Namwirye Station on Line 8. Tram construction is also scheduled to begin this year in Dongtan New Town 2, the largest new city in Korea. It is a large-scale tram construction project with a total length of 34.4 km promoted jointly by Hwaseong, Suwon, and Osan cities. The impact of railways on the real estate market is determined by the benefit radius and transfer routes. When the Dongtan 2 New Town tram opens, it will connect the southern metropolitan area, and it will also be possible to transfer to the Suin Bundang Line at Mangpo Station and the GTX-A Line at Dongtan Station. It is highly likely that this will be a trigger for an increase in house prices near the station. Tram construction is also booming in local metropolitan cities. The tram, which will become Daejeon Metro Line 2, will begin construction this year. It is a circular line with a total length of 38.8km that circles the five autonomous districts of Daejeon, and is scheduled to open in 2028.
![Bundang city, Seongnam, Gyeonggi-do. [뉴스1]](https://dimg.donga.com/wps/NEWS/IMAGE/2025/01/11/130840769.1.jpg)
Attention to ‘leading district for underground railway project’
In the same context, the Seoul light rail project also needs to be considered. As can be seen from the case of the Sillim Line, which opened in 2022, light rail has a significant impact on nearby real estate values. The price per 3.3㎡ of a small apartment over 30 years old in the Sillim Line station area easily exceeds 20 million won. The Northeast Line, which runs through Nowon, Gangbuk, and Seongbuk-gu to Wangsimni Station in Seongdong-gu, is scheduled to open in 2026, and is expected to add a transportation premium to the reconstruction and redevelopment area in the northeastern part of Seoul. Another light rail line scheduled to begin construction next year in Seoul is the Western Line. It is a ‘transfer-rich’ route that connects transportation-disadvantaged areas in the northwest and southwest areas of Seoul and allows transfer to subway lines 1, 2, 6, 7, and 9. The key to the Western Line project is whether the agreement scheduled for the first half of this year will proceed smoothly. Both trams and light rail are policies targeting transportation-disadvantaged areas where development benefits are uncertain. The project was delayed for a long time, causing concern to residents. However, the cause of securing transportation infrastructure in relatively underprivileged areas does not change. In an era of political instability, it is highly likely that it will gain momentum and serve as a driving force for rising housing prices in the surrounding area.
Meanwhile, undergrounding railways is a policy that is likely to receive support regardless of the ruling or opposition party. This is because there is wide consensus on the policy principle of ‘recreating disconnected urban space’ and its effectiveness is clear. In that respect, this policy is likely to be a long-term source of increased housing prices. This is why it is necessary to pay attention to the leading district for the underground railway project to be announced in the first half of this year.
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Cho Young-gwang, Housenomist
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