Gap between Prime and Secondary Locations Widens

A phenomenon of an increasing gap between prime and secondary locations is appearing in the real estate market. This trend is particularly clear when comparing home price recovery in the Gangnam and Nowon areas. For example, if one purchased a 10-pyeong small apartment in Bundang and a 20-30 pyeong apartment in Ilsan with the same 700 million won, the difference in asset value appreciation between the two regions has significantly widened.

This phenomenon also occurs within secondary locations, where the rate of home price increase varies even among similar areas. Investors need to recognize this disparity in returns and respond quickly.

Compared to the past, regional home price trends have changed. During the Moon Jae-in administration in 2017, the Ilsan area also saw a simultaneous rise in home prices, but currently, unlike Gangnam and Nowon, which are showing recovery, Ilsan's recovery is slow.

Previously, when home prices rose and fell, Gangnam and Ilsan moved relatively equally, but this is no longer the case, indicating a deepening differentiation between regions.

If real estate purchasing decisions are difficult, it is best to use the price fluctuation rate as a criterion. Now, whether home prices have risen more or fallen less is an important judgment criterion. It is necessary to make decisions by analyzing at least three years of price fluctuation rate data.

A local expert emphasizes, "If you don't know, just look at the price fluctuation rate and make a decision. Whether it has risen more or fallen less is important now. I hope you make a decision by looking at at least about three years."

Currently, a major disruption has occurred in the Jeonse and monthly rent market, with monthly rent prices rapidly increasing. To alleviate housing instability, regardless of whether home prices rise or fall, it has entered a phase where one must unconditionally buy one's own home.

A local expert argues, "Since I am a person who claims that a big problem has occurred in the Jeonse and monthly rent market, I will assert that it is now a period where one must unconditionally buy one's own home, regardless of whether home prices rise or fall."

Questions are being raised about his understanding of the fundamental game of the current real estate market.

A local expert comments, "I think that person doesn't understand the game itself right now. He's still talking about home prices, so he's actually coming out now and arguing that home prices will rise, but I think talking about that itself means he's not a real expert."

Caution is required when interpreting news articles about an increase in government housing starts. Rather than positively judging based solely on figures like 19,000 units of housing starts in Seoul, a 44.4% increase, it is important to check whether the construction entity is private or public.

A simple increase in figures may be due to a base effect, so it is necessary to grasp the essence rather than the numbers themselves. A local expert says, "First, think about whether the starts are private or public. That's accurate. The essence here is that. It's not important that it increased. That's just a base effect."

The biggest reason is that the price recovery is slower compared to other regions. It recorded the largest drop across Gyeonggi Province and Incheon, falling short of the metropolitan area's average recovery rate.

Many people consider purchasing due to the seemingly low price of mid-10 million won per pyeong, but a local expert says that actual price recovery is minimal, so other locations are often recommended.

Within Incheon, Geomdan is evaluated as better than Songdo. Songdo emphasizes self-sufficiency, while Geomdan has characteristics favorable for population movement as part of the Seoul metropolitan area. The reason for recommending only Geomdan after returning in 2023 is in this context. Songdo's price recovery rate did not even reach the average for the Seoul metropolitan area or Incheon.

It is advised that with funds of 20-30 million won per pyeong, similar to Songdo, it would be a better choice to purchase a prime location complex in Seoul instead.

Dongtan is reported to have risen significantly in recent news articles, but despite the upward trend, caution should be exercised regarding purchases. One of several reasons is that when analyzing price fluctuation rates and individual complexes, prices are already expensive. This is true for 33-pyeong units, but looking at the average price per pyeong in the region, it is already a high-priced city exceeding 50 million won.

At this price, one should consider better options by relatively evaluating its value against core areas like Gangnam, and it should also be kept in mind that the drop could be larger than other areas during a downturn.

Articles stating that apartment prices have surged by over 20% in some areas like Bundang, Gwangmyeong, Dongjak, and Suji, should not be misleading. A local expert re-emphasizes that "real estate is a relative evaluation." A surge in a specific area does not represent the overall trend of the real estate market.

Such increase rates should be relatively evaluated by comparing them with 2022 downturn data. Given that there were areas with larger drops than Nowon, making investment decisions based solely on the increase rate is risky.

It is projected that the price gap between new and existing constructions in the real estate market could widen significantly in the future, similar to Japan. Looking at the table showing an average price difference of more than four times for new mansions, Korea also needs to pathologically recognize the necessity of entering core areas.

If Seoul's reconstruction becomes full-fledged, there is a concern that the aging of existing constructions in new towns like Dongtan will accelerate. The phenomenon of cash-rich individuals flowing into Seoul's core areas is already occurring, suggesting that polarization will deepen further in the future.

It is time to focus on population changes rather than the extent of drops or rebounds. A local expert has continuously pointed out the issue of population outflow from this area since 2023.

Such population outflow can reduce regional vitality and degrade the quality of the living environment, negatively affecting the city's long-term sustainability. Therefore, those considering investment in this area should eliminate such risk factors in advance.

Regions where population outflow is in full swing can result in exacerbated drops and difficulty in rebounding. When investing in real estate, population change trends should be thoroughly analyzed, and investment in areas with clear population decline should be approached cautiously.