[Exclusive] Gap Investing in Guri Halved in 6 Months... Speculators Left 5 Months Before Regulation [Real Estate A to Z]

Influx of Genuine Buyers Trading Up After Selling Previous Homes
Delayed Government Response Despite Clear Signs of Overheating, Action Taken Only After Local Elections

The proportion of gap investments—where buyers purchase homes with existing tenants—in newly regulated areas such as Dongtan, Giheung, and Guri fell sharply in the first half of this year. Earlier this month, the government designated these regions as triple-regulated zones, including land transaction permit zones, citing concerns about speculative overheating. Shortly after, there was debate in the market about whether these regulations were "too late," and this has now been substantiated by the data. Instead of gap investors, genuine homebuyers with cash, such as proceeds from selling previous homes, have filled the gap in transactions. As the government belatedly applied blanket regulations, controversy is expected to grow over their effectiveness, with more voices calling for a redesign of the criteria for designating regulated areas.

According to housing acquisition funding plans submitted by the Ministry of Land, Infrastructure and Transport to Assemblyman Lee Jongwook's office from the People Power Party on July 4, the gap investment that the government aimed to block had already declined at the beginning of the year.

In Dongtan District, Hwaseong-si, the proportion of gap investments—using tenants' deposits (jeonse)—peaked at 13.8% in January this year, up from 10.3% in November last year, right after the October 15 measures. However, this figure dropped by half to 6.6% in March. As of May, it stood at 9.1%, still below 10%.

In Guri, where the gap investment ratio reached 25% in December last year, it fell to just 11.1% in May this year—less than half. Likewise, in Giheung District, Yongin-si, the ratio dropped from 22.0% to 9.7% during the same period. The government cited indicators such as the proportion of gap investors and non-local buyers as the basis for regulation, but by the time the regions were designated as regulated zones, most speculative demand had already exited the market.

The proportion of reported transactions involving tenant deposits in these areas dropped from 23.1% in February to 19.3% in May this year. The number of gap investment transactions, which reached 548 cases in January, plunged to 240 cases by March. In contrast, the total number of submitted funding plans (transactions) increased from 1,292 in March to 1,611 in May. This indicates that speculative purchases with jeonse arrangements dropped out, and other forms of capital flowed in to replace them.

Apartment complexes around Dongtan Station, Hwaseong-si, Gyeonggi Province, on the 30th of last month. Photo by Yonhap News

The void left by gap investors was filled by genuine homebuyers, such as those "trading up" to a new property. In the case of Dongtan, demand for actual residence surged due to the opening of the GTX (Great Train Express), the timing of performance bonuses at nearby Samsung Electronics and SK hynix semiconductor plants, and the expansion of company loan support. The proportion of buyers using proceeds from stock and bond sales increased from 2.7% in November last year to 6.2% in May this year. The proportion of transactions using proceeds from disposing of previously owned real estate rose steadily from 29.8% in January to 35.1% in May. The government tightened the loan-to-value (LTV) ratio to curb excessive leveraged speculative demand, but the data shows that the increase in loans was mainly driven by real buyers trading up after selling their existing homes.

Similarly, in Guri and Giheung, the gap left by jeonse-based purchases was replaced by actual homebuyers who secured bank loans themselves. In Guri, the proportion of transactions involving loans, which fell to the low 20% range during the gap investment surge from October to December last year, returned to the 30% range this year. Giheung saw a similar trend, with the loan ratio rising from 24.2% in December last year to 29.6% in May this year. While the increase in loans may serve as grounds for regulation, there is a clear distinction between genuine buyers who purchase after passing rigorous bank reviews and speculative buyers who rely on others' jeonse deposits. If the goal is to curb excessive lending, then loan policies should be revised; instead, the government’s approach of designating entire regions as regulated has also restricted ordinary people trying to move homes legitimately.

Debate is expected to intensify over the government’s delayed intervention. Dongtan, Giheung, and Guri had already met the criteria for regulated areas, with price increases between February and April of this year, making immediate action possible from mid-May. In particular, Dongtan showed a clear overheating signal in the data, with monthly price increases since the start of the year. Nevertheless, the Ministry of Land, Infrastructure and Transport postponed its decision for over a month and only introduced regulations after the June 3 local elections had concluded. Assemblyman Lee Jongwook commented, "The government should stop relying on patchwork regulations and present more detailed measures tailored to actual market conditions."

This content was produced with the assistance of AI translation services.