Amid the government and Seoul's designation of Gangnam's three districts (Gangnam, Seocho, Songpa) and Yongsan as land transaction permission zones, an analysis has emerged indicating a negative impact on dwellings stock prices.
On the 20th, Bae Se-ho, a researcher at iM Securities, noted that "(the reassignment of land transaction permission zones) is expected to dampen the short-term increase in apartment sales transactions and rising prices in Seoul," and that "given investment sentiment, this government's regulation may have a negative effect on dwellings stock prices."
In February, the Seoul City government announced that it would abruptly lift the land transaction permission zones in Jamsil, Samsung, Daechi, and Cheongdam, but within a month changed its stance. As house prices skyrocketed, it not only reassigned the lifted zones but also included a wider area. Consequently, gap investments (buying and selling by using jeonse deposits) are prohibited in that region.
The sale prices of apartments in Seoul have risen sharply since last month, when the land transaction permission system was lifted. According to KB Real Estate, the increase rate was recorded at 0.08% in the third week of February, 0.14% in the fourth week of February, and 0.16% in the first week of March.
Bae noted that "if the government expands the designation of speculative overheating zones, considering the cases from 2017 to 2018, the slowdown in sales transactions could become even more pronounced."
Considering that it is also entering a cycle of declining benchmark interest rates, he advised that "the arrival of the cycle of sharply reduced occupancy in Seoul (2026-2028) and the continued rise in monthly rental prices may lead to a balloon effect on prices as a result of tightened regulations."
Bae emphasized the government's and Seoul's recent announcements regarding additional management and regulations. The day before, the government stated that it would further designate areas as adjustment target zones and speculative overheating zones where house prices continue to rise after the designation of land transaction permission zones. It also mentioned that it would strengthen monitoring of household lending in the metropolitan area.
Bae predicted that "(these measures will) likely have a negative impact on investment sentiment related to dwellings," and added that "this designation will last for six months from the 24th of this month to September 30, but considering the rising trend in sale prices, there is a possibility of extension if necessary."