Kim, a 38-year-old office worker living in Seongbuk District, Seoul, had been aiming to win a subscription for a newly built apartment until early this year, but recently shifted his focus to buying a redevelopment villa in the Gangbuk and southwestern areas of the city. With the presale price of private apartments in Seoul exceeding 63 million won per 3.3 square meters and prices of older apartments rising amid a jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent) shortage, he decided it was better to buy even a villa and wait for redevelopment.
"Apartments have already risen too much, and I can't buy one with the money I have now," Kim said. "Even if it takes time, I think it's a reasonable choice."
The wave of buying by people in their 30s, who have driven the rise in mid-to-low-priced and small-to-mid-sized apartments in Seoul valued at 1.5 billion won or less this year, is now spreading beyond Gyeonggi Province apartments and Seoul row houses and multi-family homes into the redevelopment market at its earliest stages. Amid a decline in new housing supply, rising presale prices and a worsening rental crunch, investment in redevelopment villas is increasing, led by people in their 30s who lack financial means but have an edge in access to information.
Buyers in Their 30s Eye Redevelopment Beyond Seoul and Gyeonggi Apartments
According to the Korea Real Estate Board on Wednesday, transactions of non-apartment properties in Seoul exceeded 5,000 in both April and May, driven by this spread of redevelopment investment. It was the first time in four years, since May 2022, that Seoul non-apartment transactions surpassed 5,000. The share of buyers in their 20s and 30s in non-apartment transactions rose to 31.7% in October last year, entering the 30% range, and expanded to 34% to 35% in April and May this year.
In particular, investment in Seoul non-apartment properties by those in their 20s and 30s has increased noticeably in areas at the early stages of redevelopment. The head of brokerage firm A in Nokbeon-dong, Eunpyeong District, Seoul, said, "The area around 35-78 Nokbeon-dong was selected as a candidate site for Rapid Integrated Planning redevelopment in November last year, and buying demand surged in the run-up to the selection." He added, "Eight out of 10 buyers were in their 30s." Analysts say that expectations for revitalized redevelopment, as the Rapid Integrated Planning scheme gained momentum again following Seoul Mayor Oh Se-hoon's success in winning a fifth term, also fueled the buying demand.
In some prime areas, prices are surging even at the "serial number assignment" stage, which can be considered the starting point of a redevelopment project. Serial number assignment is a procedure in which the district office assigns a management number to collect residents' consent forms, and is effectively the first step of the Rapid Integrated Planning scheme. In the case of Sadang District 21 in Dongjak District, which received its serial number in December last year and was selected as a Rapid Integrated Planning candidate site in May this year, transactions surged around the time of the serial number assignment, with 74 multi-family homes traded by mid-May.
With each transaction, prices jumped sharply. Multi-family home prices, which were 70 million to 80 million won per 3.3 square meters of land share before the serial number assignment, jumped to around 120 million won immediately after and now start at asking prices of 150 million won. An official at nearby brokerage firm B said, "For small multi-family homes, transactions have gone up to 180 million won per share, with asking prices formed at similar levels." He added, "Buyers just before the serial number assignment effectively bought at more than 100 million won cheaper per pyeong."
Wealthier Buyers in Their 30s Target Prime Non-Regulated Locations in Gyeonggi
While the early stages of redevelopment are drawing attention as a "last housing ladder" for those in their 30s who are tight on funds, those in their 30s with higher incomes and relatively deeper capital reserves are turning to apartments in Gyeonggi Province, where prices are comparatively low relative to housing conditions. In fact, major areas in Gyeonggi that saw steep apartment price rises this year share a common trait: they are places where those in their 30s concentrated their purchases.
According to the Korea Real Estate Board, the share of buyers in their 30s is prominent in areas with high cumulative price increases this year. In the case of Dongan District in Anyang, where apartment prices rose 10.26% this year, the share of buyers in their 30s reached 53.7% from January to May. Gwangmyeong, where one in two buyers was in their 30s (51.3%) over the same period, saw a home price increase of 9.5%. In Hwaseong's Dongtan District and Guri, which posted apartment price increases of 13% and 8.2% respectively this year and were additionally designated as regulated areas on Sunday, the share of buyers in their 30s reached 47.4% and 45.7%, considered to have led the price rise.
Experts believe that as long as home price increases driven by supply shortages and instability in the rental market persist, buying by those in their 30s will continue for the time being. In particular, the fact that the purchasing power of those in their 30s has changed qualitatively is a factor pointing to the durability of buying demand. A growing share are realizing investment gains from stocks and cryptocurrencies to use as home purchase funds, and the sources of funding available to those in their 30s for buying homes, such as the special newborn program, have become more diverse. On top of this, financial support through gifts and inheritance is also increasing, backing the buying capacity of those in their 30s.
Ham Young-jin, head of Woori Bank's real estate research lab, said, "The decline in apartment move-in volumes in Seoul is set to continue through next year, making it structurally difficult for rental listings to increase significantly." He added, "Through next year, the home-buying demand of end users in their 30s will continue." Chae Sang-wook, CEO of Connected Ground, also forecast, "Unless the situation of 'rising demand and insufficient supply' improves, with base rate hikes and large-scale supply plans presented simultaneously, the young generation's desire to buy homes and the rise in home prices will not easily be curbed."
