Last-minute contract calls surge as designation looms
Homeowners say prices will rise regardless of curbs
Sellers cite precedent, refuse to lower asking prices
Buyers and sellers weigh complex calculations
I wasn't sure it would happen, but I never expected them to suddenly designate it a regulated zone like this. I'm brokering a deal for a newlywed couple in their 20s who want to buy right away — they want to knock off tens of millions of won, but the homeowner sees no reason to rush. They've watched prices climb in other regulated zones and learned their lesson, so they have no reason to lower the price.
With Dongtan, Guri and Giheung designated as regulated zones and land transaction permit zones, the mood around apartment complexes near Giheung Station — which have drawn heavy buying interest from people in their 20s and 30s this year — has grown complicated for both buyers and sellers. A tug-of-war has emerged between buyers hoping to lock in a lower price before the land transaction permit zone designation takes effect and sellers holding firm on asking prices, convinced that values will rise regardless of the new restrictions. Some prospective buyers are also delaying purchases until the government releases its tax reform plan later this month, adding to the confusion on the ground.
Real estate agencies near Giheung Station in Giheung-gu, Yongin, Gyeonggi Province, were a mix of bewilderment at the government's surprise announcement and frantic activity from buyers rushing to sign contracts before the regulations kick in when a reporter visited Monday. At three or four offices, young couples could be seen reviewing contract documents or consulting with agents.
Agents said inquiry calls poured in immediately after the government announced it would designate the areas as speculative overheating districts and adjustment target areas starting Tuesday, and as land transaction permit zones starting Saturday. The head of Agency A near Hillstate Giheung, the flagship complex in the area, said the announcement had prompted a wave of calls from people who had been considering buying in Giheung. "The mood varies by complex, but we got quite a few inquiry calls after the regulation announcement from people who had been thinking about buying here," the agent said, adding that a neighboring agency had a buyer ready to sign a contract on Tuesday.
Giheung has seen sharp price increases this year, particularly around Giheung Station, driven by demand from employees at major companies including Samsung Electronics' Giheung campus, Hyundai Motor Company's Mabook campus and the Hyundai Mobis research institute, as well as workers commuting via SK hynix shuttle buses. According to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system, an 84-square-meter unit at Hillstate Giheung sold for 1.25 billion won ($807,000) on June 13, setting a new record high. That represents a gain of nearly 300 million won in less than six months compared with the 970 million won the same unit type fetched in January.
While buyers are inquiring about purchasing before the regulations take effect, agents said the gap between buyers and sellers remains wide, as buyers resist the sharp run-up in both actual transaction prices and asking prices.
The head of Agency A said asking prices for 84-square-meter units at Hillstate Giheung are around 1.2 billion won, and that some homeowners had called to say they would pull their listings if the units did not sell at that price before the regulations took effect. "Once the regulations apply, the supply of listings will shrink," the agent said.
The head of Agency H also noted that prices in Suji and Bundang had kept rising even after being designated land transaction permit zones. "There's precedent, so sellers see no reason to lower their prices," the agent said, adding that a discount of 5 million won is considered a major concession and that simply not raising the price is seen as a win.
Some sellers looking to trade up to another property, however, have cut their asking prices in hopes of selling before the land transaction permit zone designation takes effect. The head of Agency K near Giheung Station The Sharp said one homeowner who had initially raised the asking price by 50 million won, saying there was no rush, called first thing in the morning after the regulation announcement to say they would adjust the price and asked to have the unit sold before the designation. "But cases like that are the exception," the agent added.
Agents said buyers who are committed to purchasing are watching and waiting for distressed listings, but a significant number of prospective buyers have shifted to a wait-and-see stance.
The head of Agency K said the complexes in the area had attracted not only employees from major companies but also young investors. "If you're buying to live there it doesn't matter, but gap investment will no longer be possible, the area will be under restrictions through December next year, and there are too many things to calculate — like whether a future sale would be subject to the heavy capital gains tax surcharge," the agent said.
The agent added that a viewing appointment scheduled for Tuesday had been canceled, along with all weekend appointments. "The government is set to release its tax reform plan at the end of July, so people want to check the tax implications first before making a decision," the agent said.
Given the different calculations each buyer and seller is making depending on their situation, agents on the ground do not expect a surge in last-minute transactions even though some last-minute demand exists. The head of Agency H said prices had already risen so much that transactions had been sluggish even before the regulations. "People see prices differently, so it's not easy to get deals done," the agent said.
The Ministry of Land, Infrastructure and Transport announced Sunday, following a deliberation by the Residential Policy Deliberation Committee, that Dongtan-gu in Hwaseong, Giheung-gu in Yongin and Guri — three areas in Gyeonggi Province — would be designated as speculative overheating districts and adjustment target areas effective Tuesday. Gyeonggi Province also plans to designate the same three areas as land transaction permit zones from Saturday through Dec. 31, 2027, following approval by the provincial urban planning committee.
hwshin@heraldcorp.com
