New Sejong Initiative Jacks up Property Values

  • By Ahn Joon-ho

    July 23, 2020 11:55

    The ruling party's renewed push to make the city of Sejong the administrative capital has sent property values there soaring.

    According to the Ministry of Land, Infrastructure and Transport's database on Wednesday, the price of an 85 sq.m apartment in an upscale part of Sejong City surged from W720 million in late October of last year to W915 million on June 8 (US$1=W1,198). It then jumped to W1.1 billion after Minjoo Party floor leader Kim Tae-nyeon on Monday mentioned the need to relocate the main seat of government to Sejong.

    Homeowners there who put up their apartments for sale are reconsidering plans, while prices have surged between W100 million and W200 million in just a few days.

    Sejong has seen the steepest rise in apartment prices since the government designated the area in August 2017 as a real-estate speculation zone.

    One realtor there said, "We used to get about 20 phone calls a day but now get more than 50 since talk of relocating the seat of government here." "No matter how much the government raises taxes, everyone believes apartment prices will surge enough to offset them eventually," the agent added.

    This has benefited primarily government workers and employees of state-run companies who bought homes there years ago at below market rates when their offices were relocated to Sejong.

    People look at a map at an estate agency in Sejong City on Wednesday. /Yonhap

    There have been several problems with making Sejong the administrative capital. First of all it was judged unconstitutional, and then it failed to draw the expected numbers away from overcrowded Seoul and only attracted residents from neighboring Daejeon, Cheongju and Gongju in the Chungcheong provinces.

    The administrative city was founded in 2007 with a view to making it the new administrative capital in the manner of Putrajaya or Canberra. Since 2012, numerous ministries and state agencies have been moved to Sejong, but the National Assembly, presidential office and many key agencies still remain in Seoul.

    Real estate analyst Lee Sang-woo said, "Do you think ordinary Seoul residents will move to Sejong just because Cheong Wa Dae and the National Assembly move there? The only thing that will change will be the prices of apartments in Sejong."

    Meanwhile, apartment prices around a golf course in the northeastern Seoul suburb of Taeneung have been surging since President Moon Jae-in on Monday cited the area as a potential site for a new apartment complex to ease the housing shortage.

    Kwon Dae-jung, a professor at Myongji University, said, "The government has ended up jacking up housing prices by announcing new policies left and right without coming up with clear plans to boost apartment supply. The hasty announcements of policies only fan panic buying, which ends up pushing up prices even further."

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