Since the start of this year, villa (row and multi-family) transaction volume in Seoul has increased by nearly 25% from last year. Experts say more people are seeking to invest small amounts because, unlike apartments, there is no owner-occupancy requirement, making gap investment (sales with a jeonse tenant in place) possible, and if redevelopment proceeds, buyers can receive move-in rights for newly built apartments. There is also analysis that, as the average sales price of Seoul apartments has exceeded 1.5 billion won, end-user demand without the financial capacity is flowing into the market.
According to the Ministry of Land, Infrastructure and Transport on the 23rd, 11,491 row and multi-family sales have been completed from Jan. 1 to on the 22nd this year. That is an increase of 2,260 transactions (24.5%) from the same period last year (9,231). There are villa transactions of 1 billion won or more, but contracts in the relatively lower price range of 500 million to 600 million won accounted for most sales. There were also cases where contracts were concluded with small sums in the 100 million to 200 million won range.
By month, 3,729 contracts were concluded in January, and there were more than 3,000 changes of hands in February (3,006) and March (3,552). In April, 1,204 sales were made through on the 22nd.
Some villas have also risen in price recently. At Gwangmi Villa, located at 61-16 Samjeon-dong, Songpa District, an exclusive area of 17.06 square meters changed hands for 355 million won on Mar. 30, then a transaction was completed for 370 million won on Apr. 21. The price rose 15 million won in just over 20 days. At "Heukseokddeul An Ae," located at 186-25 Heukseok-dong, Dongjak District, an exclusive area of 48.18 square meters changed hands for 550 million won on Mar. 30, but on Apr. 15, a smaller unit with an exclusive area of 34.89 square meters sold for 650 million won.
In the market, many view the government's tough regulations and rising home prices as having contributed to the increase in villa sales. When the government announced the Oct. 15 real estate measures last year, it designated all of Seoul and 12 areas in Gyeonggi Province as subject to the land transaction permit system, which created an owner-occupancy obligation for those seeking to buy homes and made gap investing in Seoul apartments impossible. Row and multi-family dwellings that include one or more apartment buildings also became subject to the land transaction permit system. However, general row and multi-family dwellings were excluded from the system, making sales with jeonse tenants possible.
Shin Bo-yeon, a professor in the Department of Real Estate AI Convergence at Sejong University, said, "There is demand for purchasing villas for long-term investment because there is no owner-occupancy requirement and, if you register as a rental business operator, they are excluded from the dwelling count and thus from the comprehensive real estate tax." Yang Ji-young, a senior official in the asset management department at Shinhan Investment & Securities, also said, "Recently, the Seoul city government has been speeding up maintenance projects such as the expedited integrated planning and the Moa Town initiative to redevelop old villas into apartments, and this climate also contributed to the increase in villa sales."
It is also analyzed that the surge in Seoul apartment prices, which has made purchases or rentals for end use more difficult, contributed to the increase in villa sales. According to KB Real Estate, the average apartment sales price in Seoul in December last year was 1,508.1 million won, exceeding 1.5 billion won for the first time. Kim In-man, head of the Kim In-man Real Estate Economy Research Institute, said, "Among newlyweds and other young people, many do not have the financial capacity to buy an apartment in Seoul, and after the Oct. 15 measures, even jeonse and monthly rental listings have disappeared, so more people are buying villas for end use."