Despite little change in the quality of urban amenities and a declining population, Gwangju Metropolitan City experienced a dramatic increase in the sales prices of apartment units since a series of housing market measurements, including the upward adjustment in property tax rates and home-purchase restrictions in a speculative area, mostly designated in Seoul, Gyeonggi, and Incheon. Employing difference-in-differences (DID), we estimate the effects of the external housing demands on housing prices in Gwangju while controlling for the effect of local housing demand with the pre-to-post-intervention of housing policy practices. We found that policy intervention and external housing demand are positively associated with sales prices of apartments in the local housing market of Gwangju. This implies that speculation-related pseudo-demand plays a role in surges of sales prices. Despite the strong dependency of the housing market on localities, the movement of pseudo-demand on real estate investment at the interregional or national level needs to be identified and considered in policy design.