Table of Contents
- Yangsan Real Estate Outlook: Is Apartment Investment Promising? Analysis of Growth Limits in Yangsan City
- The Boundaries of Urban Growth Created by Geographical Limitations
- Aftereffects of Over-supply and Decline in Value of Existing Apartments
- Trends in Apartment Price Fluctuations in Key Areas of Yangsan
- Weakening Demand Base and Accelerated Population Outflow
- Possibility of Mutual Decline in Sales and Rental Markets
- Yangsan Apartment Market: A Time for Caution in Approach
Yangsan Real Estate Outlook: Is Apartment Investment Promising? Analysis of Growth Limits in Yangsan City
Yangsan has achieved remarkable growth in recent years through the development of Mulgeum New Town and Sasong New Town, along with enhanced transportation networks between Busan and Ulsan. However, underlying this growth are structural limitations and risk factors regarding the long-term outlook of the real estate market.
Therefore, I personally hold a negative view of the real estate market in Yangsan, which signals to investors that a more cautious approach is necessary. At this juncture, it is important to conduct a more detailed analysis when making investment decisions.
The Boundaries of Urban Growth Created by Geographical Limitations
Yangsan has a long, stretched terrain from east to west, with the high Cheonseongsan mountain in the center. This mountain acts as an obstacle to urban development.
The western areas of Mulgeum and Sasong, as well as the eastern area of Wongsang, are effectively separated from each other, leading to a significant gap between regions.
Yangsan is currently facing geographical and institutional limitations that make urban expansion difficult. The wide designation of development restriction zones and previously developed areas like Jeongsan District severely limit the supply of new land for construction. These restrictions are anticipated to have a significant impact on future urban development.
Ongoing urban development projects in Yangsan include the Gasan Industrial Complex in Dongmyeon Gasan-ri and the development of Jeongsan New Town in Jeongsan-ri. However, aside from these, there are no flat areas left in the city to establish large-scale industrial complexes or residential complexes, apart from the ICD redevelopment and the development of the Yangsan Busan National University site.
This situation leads to limitations in the population capacity of the city, acting as a critical factor that restricts the growth potential of the real estate market. Ultimately, it is expected to have a profound impact on the future development direction of Yangsan.
There are also issues related to the development of transportation networks in Yangsan. Before the 2000s, this region relied on National Route 35 and the Gyeongbu Expressway, which included Geumgok-daero and Yangsan-daero.
There had been no major changes except for the opening of the central expressway branch in the 1990s. However, improvements in accessibility towards Jeonggwan began in the 2010s through the Jeonggwan Tunnel.
It is noteworthy that a road connecting Gimhae Sangdong and Yangsan is expected to open after about 25 years. These changes are anticipated to further improve the transportation conditions in Yangsan.
If the branch of the Gyeongbu Expressway extending from Yangsan IC to Mulgeum, Gimhae Sangdong, and Gwangjae had been established early, the transportation network and urban structure of Yangsan would be quite different from now.
Additionally, the ongoing issue regarding the Busan Subway Line 2, which does not pass through the center of the Mulgeum New Town, has yet to be resolved.
Such faulty expansions of roads and rail networks are limiting the development potential of Yangsan even further.
Aftereffects of Over-supply and Decline in Value of Existing Apartments
Yangsan has supplied a large number of apartments through the development of New Towns in Mulgeum and Sasong. As a result, between 2022 and 2023, apartment prices have declined, and the amount of unsold units has increased. In the short term, there may be a possibility of reduced supply, but the already abundant supply is expected to continue to burden the market.
In the early development areas of Yangsan, such as Nambu-dong, Jungbu-dong, and Mulgeum Beomeo-ri, apartments are increasingly aging as they surpass 20 years since completion. The first phase of Yangsan New Town began occupancy in the late 1990s and continued into the mid-2000s.
These aging apartments have outdated layouts with three-bays and ground-level parking, and they also lack community facilities. Due to high floor area ratios, redevelopment is difficult. Moreover, the tendency of young generations to prefer the 'cold and warm' and new builds is increasing the likelihood of depreciating asset values in these apartments.
The total enrollment for the first phase of Yangsan New Town is recorded as 464 students in Jungbu Elementary, 580 in Saplyang Elementary, and 532 in Sinyang Elementary for the 2024 school year. Reports also suggest a significant decrease in the number of new students in 2025.
This situation highlights the polarization between regions within Yangsan and the gap between new and old constructions. This issue needs to be continuously discussed in the future.
Trends in Apartment Price Fluctuations in Key Areas of Yangsan
The trends in apartment price fluctuations in key areas of Yangsan are as follows.
Nambu-dong 1st First Cozy World
The Nambu-dong 1st First Cozy World, located in the first phase area of Yangsan New Town, started at around 100 million won in the early to mid-2000s and steadily rose, reaching over 300 million won. Recently, during the adjustment period of the real estate market, the current transaction price has come to approximately 280 million won. The complex has now entered its 20th year, and the aging process is underway.
Deokgye-dong Trimaje Yangsan 1st Complex
The initial market price of Deokgye-dong Trimaje Yangsan 1st Complex reached the high 400 million won range; however, due to interest rate hikes and market shrinkage, it has fallen to the high 300 million won range. Currently, it maintains a price in the low 400 million won range, and there have been some transactions at negative prices.
Naesong-ri Sasong The Shop Desian 1st Complex
Naesong-ri Sasong The Shop Desian 1st Complex saw a rapid price increase after occupancy, reaching the 500 million won range; however, due to the recent market adjustments, it has stabilized in the mid-400 million won range. As a result, market interest remains high, but price adjustments are taking place.
Gachon-ri Yangsan Daebang Noble Land 7th Mega City
The representative apartment of Yangsan New Town, Gachon-ri Yangsan Daebang Noble Land 7th Mega City, once recorded prices up to 600 million won. However, due to the recent real estate market downturn and interest rate hikes, it is currently trading in the mid-400 million won range.
Weakening Demand Base and Accelerated Population Outflow
Yangsan has historically developed due to an influx of population from large cities like Busan and Ulsan. However, the educational, cultural, medical, and job infrastructure in Yangsan still needs improvement, resulting in decreasing residential satisfaction among the young population.
Recent population statistics show that while the total population of Yangsan has shown a continuous increase compared to the past, it has remained around 350,000 since 2019.
By region, Mulgeum-eup has the highest population in Yangsan, but there has been a recent decrease of about 2%.
Furthermore, Yangju-dong and Pyeongsan-dong are also showing population declines of about 3% to 3.5%, indicating that some of the major residential areas in Yangsan are entering a stagnation or decline phase. These changes are expected to have a significant impact on the local residential environment and future development potential.
Dongmyeon and Deokgye-dong have recorded population growth rates of approximately 13% and 14%, showing significant growth. This is attributed to the occupation of Sasong New Town in areas such as Sasong-ri and Naesong-ri in Dongmyeon, and the supply of new housing in Deokgye-dong with the construction of Deokgye Trimaje.
However, it is difficult to argue that this localized population growth solidifies the demand base for the entirety of Yangsan. In particular, the population decline in major residential areas like Mulgeum-eup poses concerns that may dampen the vigor of the local real estate market. This situation is expected to lead to greater volatility in the future real estate market.
Recently, developments in Ilgwang New Town and Eco Delta City near Busan are being actively pursued. Additionally, new housing supplies in districts such as Daejeo District and Juchon and Shinmun in Gimhae are also planned, increasing the likelihood of migration demand to relatively better residential environments.
These trends, along with the deepening population decline and aging in the Yangsan area, may lead to reduced housing demand. Ultimately, this could result in a decrease in vigor across the entire real estate market. Hence, careful attention is required for the real estate market in this region.
Busan Gangseo-gu has maintained a steady population in recent years. If large-scale new town developments like Eco Delta City and Daejeo District advance significantly, Gangseo-gu may gain an advantage in the population influx competition with Yangsan. This change could lead to a triple blow of declining population influx, accelerating aging, and decreasing housing demand in Yangsan in the long run. Therefore, careful monitoring of Gangseo-gu's development potential is necessary.
Starting in 2025, when the occupancy of Eco Delta City begins, it is important to observe the population movement trends in Yangsan and Gimhae.
In conclusion, Yangsan is likely to face significant challenges in achieving its goal of a population of 480,000 by 2040. Without improving living conditions and strengthening self-sufficiency, sustainable growth will be difficult.
Possibility of Mutual Decline in Sales and Rental Markets
Currently, structural issues are having a serious impact on both the sales and rental markets.
In the sales market, limitations on the supply of new apartments, restrictions on urban expansion, and the presence of old apartments that cannot be redeveloped collectively make long-term price increases unlikely. Especially, competition with new housing in the Busan area may significantly diminish the investment attractiveness of real estate in Yangsan.
The rental market is no different. Primarily consisting of young and young households, if these groups avoid aging apartments and move to nearby cities like Busan, the densely populated areas of existing apartments in Yangsan could fall into a cycle of increased vacancy rates and declining rental prices. This could ultimately lead to a continuous decline in rental yields.
Yangsan Apartment Market: A Time for Caution in Approach
Yangsan appears to be growing outwardly but is simultaneously burdened by various structural risk factors. In particular, geographical constraints and limits on urban expansion, adverse effects from oversupply, aging housing and demand imbalances due to a preference for new builds, and the acceleration of population outflow are the primary causes.
These factors increase the potential for downward pressure on real estate purchase and rental prices, acting as a deterrent to long-term investment attractiveness.
The real estate market in the Yangsan area is expected to be more impacted by long-term urban competitiveness and changes in demand than by short-term development projects. Therefore, those planning investments and residences should conduct thorough market analyses and make cautious decisions.
Although the Mulgeum and Sasong New Towns have shown growth due to development, there is limited room for urban expansion and deficiencies in transportation networks are evident. Serious separations in living zones are occurring due to geographical obstacles like Cheonseongsan.
Furthermore, the development restriction zones and lack of flat land hinder new land supply, and apartments located in the first phase of Yangsan New Town are aging, with redevelopment also being difficult. Some areas such as Sasong and Deokgye are witnessing limited population growth.
There are also concerns of population outflow due to new town developments such as Eco Delta City and Daejeo District in Busan, which should be considered.
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