In March, apartment sale prices in Gyeonggi Province hit the highest level in five months since October last year. In particular, in Hwaseong, nearly 1,800 apartments changed hands in a month, the most transactions among the 31 cities and counties in Gyeonggi. Centered on Dongtan District, where a new town is located, more than 1,000 apartments apartment transactions surged largely because the area became an exception zone to the land transaction permit system (the land transaction permit system), drawing in purchases with jeonse in place (gap investment), according to some analyses.
According to the Ministry of Land, Infrastructure and Transport and the Korea Real Estate Board (REB) on the 6th, apartment sales across Gyeonggi Province in March totaled 16,895 units. This is the highest in five months since October last year (17,759 units), when the Oct. 15 real estate measures were announced. At that time, the government unveiled strong regulations, including designating all of Seoul and 12 locations in Gyeonggi as zones under the land transaction permit system, and demand to buy and sell real estate grew around the announcement, sharply increasing transactions. After Gyeonggi apartment sales hit 17,759 units in October last year, they fell to 13,662 units in November. They then stayed in the 13,000 range through February before rising into the 16,000 range in March.
Yang Ji-young, a senior manager in the asset management division at Shinhan Investment & Securities, said, "As Seoul's lease market has become unsettled and it has become harder to find jeonse homes, sentiment has formed to take out loans and buy homes," and noted, "Buyer demand is concentrating in Gyeonggi areas where apartments priced at 1.5 billion won or less, for which loans up to 600 million won are available, are clustered."
By city and county, Hwaseong recorded 1,798 apartment sale transactions. Hwaseong had the most transactions among the 31 cities and counties in Gyeonggi Province. This accounts for 10.1% of all transactions in Gyeonggi, meaning 1 out of 10 apartment sales in Gyeonggi occurred in Hwaseong.
In particular, more than 1,000 transactions occurred in just Dongtan District within Hwaseong. In February, Hwaseong created four general districts, including Dongtan District, while maintaining the existing eup-myeon-dong system. Until then, the city administered eup, myeon, and dong directly without districts, but as the population of Dongtan New Town surged, it created districts and reorganized its administrative divisions. At the time of launch in February, 949 apartments changed hands in Dongtan District. A month later in March, 1,105 units changed hands, with transactions rising 16.4% (156 units) in a month. Dongtan accounted for 61.4% of all apartment sales in Hwaseong.
Within Gyeonggi, Suwon (Yeongtong) and Yongin (Suji) had seen more transactions than Hwaseong. Experts say the increase in Hwaseong's transactions stems from regulatory effects.
Under the Oct. 15 measures, Seoul and 12 areas in Gyeonggi were designated as zones under the land transaction permit system. Buying an apartment also triggered an owner-occupancy obligation, making purchases with jeonse in place (gap investment) impossible. Mortgage loan limits were also reduced depending on dwelling price. As a result, apartments priced at 1.5 billion won or less can receive up to 600 million won in mortgage loans, those over 1.5 billion won and up to 2.5 billion won up to 400 million won, and those over 2.5 billion won up to 200 million won (the so-called 6-4-2 rule).
Many analysts say the rise in apartment sales in Hwaseong is because it is an exception area to the land transaction permit system. Hwaseong was excluded from the 12 regulated areas in Gyeonggi Province. As an exception area to the land transaction permit system, there is no owner-occupancy obligation, and if no loan is taken, there is no need to file a move-in report. Ham Young-jin, head of the Real Estate Research Lab at Woori Bank, explained, "In Hwaseong, using a mortgage loan to make a gap investment is impossible, but it is possible to buy a home with jeonse in place without taking a loan."
Kim Hak-ryeol, head of Smart Tube Real Estate Research Institute, said, "The Oct. 15 regulations have limited loans, and as home prices in key areas have risen, transactions are becoming active in nonregulated areas where gap investment is possible," and added, "In particular, Dongtan is the flagship among nonregulated areas, so transactions continue to increase." Ko Jun-seok, a professor at Yonsei University Sangnam Institute of Management, also said, "As Hwaseong was excluded from regulation, it remains an area where gap investment is possible, so transaction demand is steadily increasing," and noted, "In particular, with the opening of the GTX-A line, Dongtan New Town now has Seoul's Gangnam within its living sphere, and demand to buy homes centered on Dongtan is rising."