Home prices in Dongtan District of Hwaseong, Gyeonggi Province, have surged in a short period, raising the likelihood that the area will be designated for additional regulations. Dongtan has met the quantitative criteria for designation as a price-control area and a speculative overheating district, with recent dwelling price gains far outpacing inflation. The government said it is "monitoring market conditions," but in the market, concerns about overheating are growing as optimism over the semiconductor cycle, the impact of performance bonuses, and buying ahead of regulation converge.
According to the Korea Real Estate Board (REB) on the 12th, apartment sale prices in Dongtan rose 1.98% in the second week of June, based on the 8th, from a week earlier. The cumulative increase from Feb. 1, when Hwaseong's administrative district reorganization took effect, through the 8th of this month reached 7.19%.
Dongtan is a representative bedroom community close to major semiconductor business sites such as Samsung Electronics. Recently, as expectations for a recovery in the semiconductor cycle and the impact of performance bonus payments have overlapped, demand to buy dwellings has been flocking in. In particular, Dongtan is a non-regulated area excluded from the Oct. 15 measures that grouped all of Seoul and 12 areas in Gyeonggi as price-control areas, speculative overheating districts, and land transaction permit zones last year. Because of this, some analysis says there is considerable buying demand flowing in to avoid regulations.
Nam Hyuk-woo of the Woori Bank Real Estate Research Institute said, "On expectations of a boom in the semiconductor industry, prices are strengthening in bedroom communities in southern Gyeonggi," adding, "In Dongtan, some demand is also joining in to buy in advance with jeonse, anticipating future home price increases."
A price-control area can be designated if the dwelling price increase over the past three months exceeds 1.3 times the consumer price inflation of the relevant city or province and if conditions such as overheated subscriptions or increased pre-sale right transaction are met. A speculative overheating district can be designated if the dwelling price increase over the past three months exceeds 1.5 times the consumer price inflation of the relevant city or province. Gyeonggi Province's consumer price inflation from March to May is 1.38%. Dongtan is currently understood to have met these quantitative criteria.
A decrease in listings is also adding to upward price pressure. According to Asil, a real estate big data firm, apartment listings in Dongtan fell about 40% over the past three months. Some analysis also says demand looking to trade up from Dongtan to other areas is affecting prices in Bundang District of Seongnam and the Gwanggyo area of Yeongtong District in Suwon. Bundang apartment prices have risen 6.87% so far this year, and Yeongtong is up 5.35%.
Beyond Dongtan, Giheung District in Yongin, grouped into the "semiconductor belt," is also being discussed as a candidate for regulation. Apartment sale prices in Giheung rose 0.13% in the second week of June from a week earlier, and the cumulative increase this year is 5.66%. Considering last month's month-over-month change of 0.3%, the pace has eased somewhat, but some say it is difficult to completely rule out the possibility of designation as a regulated area.
In the market, moves to buy before any designation as a regulated area are also being detected. A prospective buyer in Dongtan said, "A real estate brokerage office said there is talk of possible designation as a regulated area or a land transaction permit zone and advised that it would be better to move up the contract."
The government says no decision has been made on whether to designate areas with sharp home price increases, including Dongtan, as regulated zones. Regarding potential designations including Dongtan, an official at the Ministry of Land, Infrastructure and Transport said, "We are continuously monitoring market conditions," adding, "Even whether to convene the Housing Policy Deliberation Committee has not yet been decided."