Aggressive home purchases by Koreans in their 20s and 30s are heating up Dongtan in Hwaseong, Gyeonggi Province. Backed by semiconductor bonuses and low-interest in-house loans, young buyers are acquiring homes with 70% financing, pushing prices higher for a sixth consecutive week.
According to the Supreme Court's Internet Registry Office on Sunday, the average loan index for collective buildings (apartments, officetels, retail units) in Dongtan-gu, Hwaseong, stood at 71.55 in May. The loan index measures the ratio of mortgage liens to transaction prices, and a reading above 70 means buyers financed more than 70% of the home price through loans.
The Dongtan-gu loan index rose steadily from 21.95 in January this year to 60.29 in February, 61.81 in March, and 64.02 in April, before breaking past the 70 mark in May. That is more than three times higher than at the start of the year.
Dongtan's reliance on loans is by far the highest even compared with major areas in the Seoul metropolitan region. Over the same period, the average loan index was 49.01 in Seoul and 64.10 in Gyeonggi Province. It exceeded levels in Seoul's Geumcheon-gu (63.02), Nowon-gu (56.57), and Dobong-gu (55.57), as well as Gyeonggi's Gwangmyeong (63.84) and Suwon's Yeongtong-gu (59.02).
Analysts say the trend reflects the fact that while the loan-to-value (LTV) ratio in Seoul's core regulated areas was capped at 40% following the Oct. 15 measures last year, Dongtan, a non-regulated area, applies an LTV of 70%, giving it relatively greater borrowing capacity.
The buyers are in their 20s and 30s. Of 3,189 apartment transactions in Dongtan from January to April this year, those in their 20s and 30s accounted for 52.8%, more than half. The market view is that record-breaking bonuses and low-interest in-house loans driven by the semiconductor boom at Samsung Electronics (005930.KS) and SK hynix (000660.KS) have boosted young buyers' purchasing power.
Samsung Electronics employees can use housing loans of up to around 500 million won at about 1.5% annual interest, while SK hynix employees can use up to 100 million won. The structure channels funds into complexes dubbed "semiconductor shuttle zones" (a play on subway-access zones combined with shuttle buses).
Prices are also rising sharply. According to the Korea Real Estate Board, Dongtan-gu apartment sale prices rose 0.60% this week, expanding gains for a sixth straight week. The cumulative increase this year has reached 5.11%.
On May 22, an 84-square-meter unit at Dongtan Station Sibeom Hanwha Kkumegreen Prestige set a record high at 1.6 billion won, while the standard-size unit at Dongtan Station Lotte Castle changed hands for 2.08 billion won. The number of listings fell 42.6% from 6,501 to 3,733 over three months, the largest decline in Gyeonggi Province.
As the overheating continues, the possibility of redesignating the area as a regulated zone is being raised. The government can consider designating an area as an adjustment target area if housing price growth over the past three months exceeds 1.3 times the inflation rate, or as a speculative overheating zone if it exceeds 1.5 times. The market view is that Dongtan and nearby Giheung have already met these requirements.
