Biz: "0.7 Billion Apartments Halved" – Sejong City Residents Scream, Even Government Officials Say "No Thanks"
10 July, 2024
Real estate speculation might as well be the national sport of South Korea, but their shiny New Administration Capital project in Sejong has been anything but a success. It only saw a fleeting moment of glory during the Moon regime when real estate speculation was at its frenzied peak.
And let's not forget the ever-present threat of war with North Korea. With tensions rising, Sejong is shaping up to be a prime target for a North Korean thermal nuclear warhead. The plummeting housing prices? Just a reflection of that very grim reality.
View of Sejong Special Self-Governing City. Photo/Sejong Special Self-Governing City
Sejong City housing prices have been on a relentless 33-week freefall, dropping so drastically that properties are now selling at half their peak prices. Yes, you heard that right—half. Now even the government officials say, "Thank you but No thank you"
According to the Ministry of Land, Infrastructure, and Transport's real transaction price disclosure system on the 10th, an 84㎡ apartment in 'Garak 20 Complex Verdium' in Goyeon, Sejong City, was sold for a mere 370 million won on the 1st. This same apartment once peaked at 700 million won in December 2020. Now, it's in the bargain bin.
An 84-square-meter apartment in Garak 7 Complex Pradium in Goyeon-dong also sold for a laughable 449 million won on the first of this month. Its highest price was 850 million won in December 2020, now chopped in half. Similarly, an 84-square-meter apartment in Gajae Village 5 Complex Sejong MMC Town in Jongchon-dong sold for a paltry 500 million won on the 5th. This once-glorious apartment hit 838 million won in November 2020 but has now slashed its price tag by half.
An 84㎡ apartment in Beomjigi 12 Complex Eco Town in Beomjigi sold for 530 million won last month. The peak price of this apartment was 1.05 billion won in November 2020. Yes, it’s another casualty in Sejong's collapsing market. A real estate agent in Goyeon-dong lamented, "The price of houses in Goyeon-dong, Beomjigi, Jongchon-dong, etc., continues to plummet. No one wants to buy, so if you don’t sell it fast, you're stuck."
Another real estate agent in Aeum-dong explained, "Last year, when the special housing loan was implemented, prices seemed to go up a bit, but then they quickly faltered and nosedived again." He added, "Outside investors vanished because the good news they expected didn't materialize." Big surprise there—the much-touted relocation of the National Assembly and installation of the presidential office were nothing but empty promises.
In 2020, Kim Tae-yeon, the leader of the Democratic Party of Korea, pushed the fantasy that the National Assembly should move to Sejong City. This fantasy lured naive foreign investors, leading to a staggering 44.93% spike in Sejong City prices that year alone. Compare that to the 7.57% national increase and the 9.08% rise in the Seoul metropolitan area during the same period. Sejong was the Pied Piper of real estate delusion.
However, the grand relocation plans stalled, and the installation of the presidential office remained in the discussion phase. Consequently, Sejong City's real estate prices began their descent. In 2021, prices dipped by 1.09%, and in 2022, they nosedived by 17.12%. Last year, they slid further by 6.4%.
This year, the downward trend continues unabated. From the fourth week of November last year to the first week of July this year, Sejong City prices have fallen for an astonishing 33 consecutive weeks, dropping 5.07% this year alone. In stark contrast, national prices fell by a mere 0.67% and the Seoul metropolitan area by just 0.24% during the same period.
While national and Seoul prices have been on an upswing since May, Sejong City remains in a freefall, with prices dipping by 0.23% in the first week of July, a steeper decline than the previous week's -0.13%.
The foreign investors who were so eager in 2020 have all but disappeared. From January to May this year, only 594 apartments in Sejong were snapped up by outsiders, a significant drop of 32.3% from the 916 during the same period last year. Compare that to around 3,100 purchases in the same period in 2020, and it’s clear: the exodus is real and brutal, over an 80% reduction.
Even the government employees, once the reliable buyers of Sejong City real estate, are now turning their backs. "In the past, government employees used to buy apartments through special offers or by purchasing existing ones, but nowadays, they are reluctant to buy, opting to rent or lease," explained a real estate agent in Aeum-dong. Even the supposed stalwarts of the market have lost faith.
Real estate experts, with their usual flair for the obvious, predict that Sejong City prices will remain weak for the foreseeable future. With demand for "one-of-a-kind" properties overwhelmingly focused on Seoul, Sejong City is left out in the cold.
"The market demand is so concentrated in Seoul that even local investors are only buying Seoul houses," noted Shim Hyung-seok, head of the Woo Daebang Real Estate Research Institute. "Sejong City prices can only rise if prices in the Seoul metropolitan area rise and the warmth spreads to the provinces." Translation: Don’t hold your breath, Sejong.