On June 17, the government introduced measures to help further boost prices
Since the government introduced cool down measures for the property market in June, real estate analysts reveal that the housing market has been responding well, which eventually led to most buyers investing outside of Seoul, reported Korea JoongAng Daily.
Among the measures implemented by the local government last June 17 was the mandate to increase the difficulty of the process or raise the price for property investment in the Seoul Metropolitan region.
Korea Appraisal Board said five major cities outside of greater Seoul witnessed a 0.58 percent increase in apartment prices in June, a substantial growth to negative 0.03 percent and 0.11 percent in May. This rate continued to grow from July to September.
Despite the rise in prices, apartments in cities outside of Seoul are still deemed as inexpensive compared to the neighbouring areas outside of the capital. In Seoul, the median price for an apartment sold in September was KRW554.6 million (USD489,117).
As for Busan, Daegu, Daejeon, Gwangju and Ulsan – five major cities outside of Seoul – the average price was KRW292.5 million. Whereas for non-major cities outside of the capital, the average was KRW227.8 million.
Real estate analysts believe that the higher rates for lump-sum rental deposits (jeonse) in contrast with the actual selling rates in suburban regions were caused by growing demand in real estate investment.
The high jeonse-to-price rate demonstrates that these regions are prepped for gap investments, a distinct type of real estate purchase in Korea that allows investors to own a property with minimal money “by using the gap between the actual purchase price of a home and the jeonse deposit,” clarified Korea JoongAng Daily.
Ham Young-jin, the head of big data at real estate app Zigbang, said: “Abundant liquidity has been circulating in the real estate market, since it has nowhere else to go. The psychology of desire to purchase property before prices increase also applies in this situation centred around unregulated regions, which have suffered smaller increases in real estate prices.”
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