Go to contents

Incheon District Leads Revival of Housing Market

Posted June. 20, 2009 09:46,   


The Cheongna district of the country’s second-largest port city of Incheon has seen surging demand for housing, with builders expressing surprise over the brisk business there.

After Halla Engineering and Construction became the first private builder this year to sell units in the district in April, many builders have sold apartments there. The highest competition rate soared to 22.85 buyers per unit (Hanwha Engineering and Construction’s Cheongna Hanwha Dream Apartment).

The rate of early contract conclusion also surpassed 90 percent. As the district’s popularity has soared, some who bought the right to buy new units have resold it.

In Seoul, the prices of Hyundai Apartments in Apgujeong-dong and Jugong 1st Complex in Gaepo-dong have increased from early this year since they are expecting reconstruction. After the city government in January allowed the building of high-rise apartments with more than 50 stories on the sides of the Han River, the prices of apartments set for reconstruction have skyrocketed.

On the other hand, those of general apartments have either remained unchanged or dropped, even in southern Seoul. The domestic housing market has also slowed, the deepening bipolarization of the market.

As many newly built apartments in Seoul’s Jamsil district were occupied in the second half of last year, certain homeowners faced difficulty renting out their homes. As the demand for leased homes has grown, especially in southern Seoul, however, the security deposit for leasing, or “jeonse,” has jumped.

The number of unsold apartments has fallen from 165,641 units late last year to 163,856 units in April, according to the Land, Transport and Maritime Affairs Ministry.

Deregulation of the housing market has boosted the sector through measures such as reduction or exemption of capital gains taxes and reduction of the capital gains tax on those owning several homes. Though housing prices have soared in certain regions, three southern districts remain designated as speculative areas. The government’s measure to lift bans on the price caps of private homes remains pending.

The popularity of the comprehensive housing subscription account has spread like wildfire since its release May 6. According to the Land Ministry, the number of subscribers reached 5.87 million at the end of last month.

As households with one or two members grow in number and more people put priority on practical use, the Korean preference for smaller homes has gotten more notable.

Two or three years ago, middle or large-size apartments were far more popular. Recently, however, smaller apartments covering 85 square meters or less are the rage. In line with the change, builders have increased supply of smaller homes.

The government also plans to designate as model neighborhoods the districts of Segok, Umyeon of Gangnam in Seoul, Wonheung of Goyang and Misa of Hanam in Gyeonggi Province.

Lee Yeong-jin, research director for the online housing data provider Dr. Apartment, said, “Boosted by high expectations for economic recovery, deregulation and development projects, the nation’s real estate market has grown faster-than-expected in the first half.”

Kim Gyu-jeong of Real Estate 114 urged restraint, however, saying, “The housing market could grow further in the second half if the economy recovers, but could contract again if companies begin restructuring.”