Sejong's property market has entered a new phase following the announcement of a second round of central government agency relocations. With nearly 10,000 public officials set to move to the city by 2031, local real estate brokers are growing more optimistic. Still, some question how many of those officials will bring their families, making the city's living conditions the decisive factor.
Sejong's apartment market has been marked by weak sales prices and firm rents, according to local brokerages and the Korea Real Estate Board on the 13th. Apartment sale prices in the city have fallen 0.93% this year through the first week of October, in contrast to a 2.89% rise in the national average over the same period. Prices declined in five of the past six weeks. Jeonse prices, by contrast, have climbed 4.46% this year, rising 0.06% to 0.14% each week over the past six weeks.
While the relocation decision is expected to lift both sale and jeonse prices, analysts say the rental market will likely react first. Relocating officials are more likely to rent before deciding whether to buy. Rent pressure will intensify further where new demand overlaps with neighborhoods already popular among officials already stationed in the city.
A nationwide shortage of rental listings, driven in part by policies encouraging owners to live in their own homes, is also showing up in Sejong. "Rents have risen sharply over the past year, and jeonse deposits on some apartments have climbed to as much as 100 million won [about $70,000]," said the head of one Sejong brokerage. "Monthly rent on a 25-pyeong unit has gone from around 600,000 won to 750,000 won, and on a 34-pyeong unit from 900,000 won to 1.2 million won." The broker added that competition is especially fierce near the government complex, where no new supply is coming. "If more officials come down from Seoul, listings will dry up even on the outskirts."
In the sales market, hopes that the relocation will break the slump sit alongside concerns about financing costs. "There are a handful of people looking at it as an investment or buying ahead of a future move-in, but it's still quiet," the broker said. "Lending restrictions and high presale prices mean the sales market hasn't picked up yet." Interest in presales in the city's smart city development, once a source of optimism, has also been muted. Presale prices of around 700 million won for a 34-pyeong unit have weighed on demand.
Some are watching to see whether the city repeats 2020, when apartment prices surged nearly 50% in a single year. "Sejong is a small city and it's all public officials, so word spreads fast," said a central government official who has settled in the city. "With a population under 400,000, adding 10,000 people is going to have a big effect on apartment prices."
The key variable is quality of life. If officials relocate their jobs but leave their families in the greater Seoul area, the boost to both housing and consumer spending could be limited. That means schools, transportation, health care and private-sector jobs need to keep pace. On top of that, a special housing supply program for employees of relocating agencies was abolished in 2021, and no decision has been made on reviving it. Commuter buses that once linked the capital region to the Sejong government complex were also scrapped in the wake of the Korea Land & Housing Corporation (LH) scandal. A considerable number of staff at the agencies slated to move are said to be weighing commuting from Seoul by KTX, citing their children's schooling among other reasons.
A pattern of leaving families in Seoul and commuting by high-speed rail has already taken hold in Sejong. Ridership between Osong and Daejeon stations and Seoul and Yongsan stations rose 85.9% over four years, from 5.83 million in 2021 to 10.84 million last year, according to Korail. Some expect demand for monthly rentals in small officetels and studio units near the government complex, used during the workweek, to rise before family relocations pick up.
That shows up in the country's highest commercial vacancy rate. Sejong's retail vacancy rate stood at 22.8% in the second quarter, far above the national average of 13.4%, according to the Korea Real Estate Board. The rate has risen from 19.0% in the first quarter of last year and worsened from 21.5% in the first quarter of this year. "Vacancies in retail space are up 10% to 20% from last year — the situation is serious," the local broker said. "People head back to their homes in Seoul every weekend, so it's hard for the commercial district to come to life."
