Real estate prices in Sejong are soaring. It is difficult to find an affordable home in this city, especially for young people. The government’s plan to move the National Assembly and many other central institutions to Sejong is expected to further drive prices. Resource: sejongrealtor.com
In addition to housing, many people in the region are speculating on real estate. In the past, the government designated areas where apartment prices have surged as speculative and put various limitations in place, but there are still many cases of soaring prices in Seoul, Sejong, and other cities.
Navigating the Sejong Real Estate Market: A Comprehensive Guide
For example, civil servants who relocated to Sejong City were allowed to obtain housing subscriptions at below-market prices. The special program gave them the opportunity to acquire apartments and sell them for hundreds of millions of won in profits.
According to a report from the Korea Institute for Urban Management and Planning, Park Jin-kyu, the vice minister of Industry, Trade and Energy, and Hwang Suk-tae, the deputy director of the Environment Ministry’s Living Environment Policy Office, sold their Sejong homes last year and made around 1 billion won each before tax. The government strongly recommends high-ranking officials to own only one home.
The objective of this paper is to develop a real options framework to measure bubbles in the Korean residential property market by incorporating the HPI and JDI into a single valuation model. This approach is unique in that it takes into account the unique leasing mechanism of Korea, which requires a Jeonse system – a tentative contract for one or two years with a large amount of deposit – to represent the value of the residence. The proposed model also utilizes volatility with heteroscedasticity to improve the numerical accuracy compared to traditional real options valuation models.