Apartment Deals Rise in Unregulated Zones During Enforcement Crackdown

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Expansion of Real Estate Market Activity Beyond Regulated Zones

The government's decision to designate the entire Seoul metropolitan area and 12 regions in Gyeonggi Province as land transaction permit zones, announced on October 15, aimed to curb speculative activity in the real estate market. However, despite these measures, the heat in the real estate market has spread to areas not under regulation, with rising apartment sales transactions and prices.

According to an analysis conducted by the real estate platform Zigbang using data from the Ministry of Land, Infrastructure and Transport, sales transactions in regulated areas—covering Seoul and 12 Gyeonggi regions—dropped significantly. During the 20 days following the October 15 measures (October 16–November 4), transactions fell to 2,424 cases, a decrease of 76% compared to 10,024 cases in the 20 days prior (September 25–October 14). In contrast, transactions in non-regulated areas of the capital region increased by 22%, rising from 5,170 cases before the measures to 6,292 cases afterward. This shift in demand is attributed to lighter loan regulations and tax burdens in these areas.

One of the areas experiencing the most significant increase in transactions was Gwonseon-gu in Suwon City. Sales there surged by 73%, from 143 to 247 cases. While parts of Suwon, such as Jang’an-gu, Paldal-gu, and Yeongtong-gu, were designated as regulated zones, Gwonseon-gu remained outside of the restrictions. Prices also rose in this area. For instance, a 123㎡ unit at Gwonseon Jai e-Pyeonhansesang in Gwonseon-dong, which was priced in the mid-to-late 600 million Korean won range before the regulations, was sold for 700 million won on November 7. The highest asking price for this unit now stands at 850 million won.

Notable Increases in Transaction Volumes

Hwaseong City emerged as the region with the highest transaction volume. Sales there increased from 561 cases before the measures to 890 cases afterward. This surge was driven by gap investment demand concentrated in Dongtan New City, which boosted transactions in large apartment complexes. Other cities in Gyeonggi Province also saw notable increases:

  • Paju and Guri Cities experienced a 41% rise in transactions.
  • Gunpo City saw a 34% increase.
  • Wonmi-gu in Bucheon City, as well as Incheon, reported a 25% rise in transactions.

Sharp Declines in Regulated Areas

In contrast, regulated areas witnessed sharp declines in transaction volumes. For example:

  • Yeongdeungpo-gu in Seoul saw a 95% drop in transactions.
  • Sujeong-gu in Seongnam City had a 93% decline.
  • Seongdong-gu in Seoul experienced a 91% decrease.
  • Bundang-gu in Gyeonggi Province saw a 89% fall.

Among previously regulated areas in the Gangnam district of Seoul, the decline was relatively smaller. Notably, Seocho-gu even recorded a 2% increase in transactions compared to pre-measure levels. Zigbang explained that “areas already under regulation were less affected by partial adjustments like loan limits.” This suggests that the impact of the new measures varied depending on the existing regulatory framework in different regions.

Conclusion

While the government’s measures aimed to cool down the real estate market, the shift in demand to non-regulated areas highlights the complexity of the situation. As investors continue to seek opportunities in less restricted zones, the challenge remains to balance market stability with economic growth. The evolving dynamics of the real estate sector will likely shape future policy decisions and market trends.

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