'Survival buying' drives up prices in unregulated Gunpo, Byeongjeom as Seoul jeonse crunch pushes newlyweds outward

As Seoul's real estate market sees a triple rally in sale prices, jeonse and monthly rent, apartment prices in unregulated areas including Gunpo and Hwaseong's Byeongjeom district are also climbing fast. While gap investment — buying with an existing jeonse lease in place — remains possible in Gunpo and Byeongjeom, agents on the ground say the price gains are being driven largely by end-users, particularly newlyweds squeezed out of the jeonse market and resorting to what brokers are calling "survival buying."

Record-high transactions and rising deals have been closing in rapid succession at major complexes in unregulated metropolitan areas such as Gunpo and Byeongjeom in recent weeks, pushing asking prices higher.

New price records are being set mainly at large complexes in transit-oriented areas. Raemian Highearth in Sanbon-dong, Gunpo — considered the flagship complex of the neighborhood — saw its 84-square-meter unit sell for 1.245 billion won ($923,000) on Sept. 14, setting a new high. Asking prices, which hovered between 1.15 billion and 1.2 billion won at the start of this year, have since risen to between 1.2 billion and 1.25 billion won.

A broker at a real estate agency near Raemian Highearth said the record sale was partly due to the unit's condition. "That unit sold at a high price because it was in perfect renovated condition, and once that deal went through, other owners stopped lowering their asking prices," the broker said. "There aren't that many listings, but the ones that do move are selling at premium prices."

Sejong Jugong Complex 6, located in the transit-oriented area around Sanbon Station, has also seen high-priced deals recently. A 58-square-meter unit in the complex set a new record on Oct. 7, selling for 675 million won, while an 84-square-meter unit did the same on Sept. 23 at 848 million won. The head of a nearby real estate agency said a 58-square-meter unit had already gone under contract last week for 695 million won, though the transaction had not yet been officially reported. "It was a popular unit in a well-renovated building," the agent added.

Agents at local brokerages consistently say the rally is being led by end-users in their 20s and 30s seeking a place to live. With jeonse listings scarce and apartment prices in nearby regulated areas having surged sharply, buyers have turned their attention to relatively affordable, newer mid-priced complexes and transit-oriented apartments in unregulated areas.

A broker at one agency said gap investment inquiries do come in occasionally, but the current spread between sale prices and jeonse deposits makes it difficult to execute. "You'd need to bring hundreds of millions of won in cash, and not many people can invest that way," the broker said.

The price gains are also reflected in official data. According to the Korea Real Estate Board's weekly apartment price trend report based on Monday's figures, Gunpo apartment sale prices rose 0.72 percent from the previous week — the second-highest increase nationwide, behind only Seongnam's Bundang district. The cumulative gain for this year stands at 9.26 percent.

A similar mood was detected in Hwaseong's Byeongjeom district, where apartment prices have risen 7.72 percent so far this year. Chipmaker employees have also been a notable presence, put off by the high prices in nearby Suwon's Yeongtong district and Hwaseong's Dongtan district. The head of a real estate agency in Byeongjeom-dong said about 30 percent of inquiries come from investors, but most transactions that actually close are from buyers intending to live in the unit.

Byeongjeom-yeok iPark Castle in Byeongjeom-dong has seen a string of record-high transactions this month. A 59-square-meter unit sold for 859 million won on Tuesday, while an 84-square-meter unit changed hands for 1.03 billion won on Oct. 1 — the first time an 84-square-meter unit in the complex has crossed the 1 billion won threshold.

The agency head said prices in Byeongjeom are not cheap in absolute terms, but look relatively affordable compared with other areas in the semiconductor belt. "A lot of people feel they need to buy something while they still have a chance to get a loan," the agent said, adding that about half of all purchase inquiries come from people who say they work at Samsung or other chipmakers. "Even employees in their 20s and 30s who are not yet married are looking at apartments," the agent said.

Some in the industry have raised the possibility that fast-rising unregulated areas such as Gunpo and Byeongjeom could be added to the list of regulated zones. Under current rules, an area qualifies for designation as an adjustment target zone if its housing price increase over the most recent three months exceeds 1.3 times the consumer price inflation rate for that city or province, and as a speculation-overheating district if it exceeds 1.5 times that rate. Whether an area is actually designated depends on a comprehensive review of transaction volume, speculative demand and the degree of market overheating. Price gains in Gunpo and Byeongjeom have now risen to levels comparable to those in already-regulated areas such as Suwon's Paldal and Jangan districts.

Experts said any additional regulation should be approached carefully, given the potential side effects. Yang Ji-young, a specialist at Shinhan Premier Pathfinder, said jeonse demand is currently being pushed out to peripheral areas like Gunpo and Byeongjeom and converting into purchase demand. "The price threshold has already been met, but if new regulated zones are designated, the balloon effect could simply shift to yet another area — that is something the government will need to think carefully about," Yang said.