The government's third real estate measures, centered on "Seoul-wide regulations," reflect President Lee Jae-myung's policy line of "Do not think about increasing your assets through speculation." The Presidential Office said it will create a real estate market monitoring body and carry out a full-scale investigation into market-disrupting acts. It means the recent overheating of the Seoul and greater capital area dwellings market is being attributed primarily to real estate speculation and market disruption. The move contrasts somewhat with a remark 5 months ago, when Lee, then a presidential candidate, said, "If you block housing speculation, side effects occur."
The Ministry of Land, Infrastructure and Transport, the Ministry of Economy and Finance, the Financial Services Commission, the Office for Government Policy Coordination (OPC) , and the National Tax Service announced on the 15th at a meeting of real estate-related ministers a "dwellings market stabilization plan" that designates all of Seoul and 12 areas including Gwacheon in Gyeonggi Province and Bundang-gu as areas subject to adjustment, speculative overheating districts, and land transaction permit zones. Going forward, in these areas, unless for actual residence, people cannot buy a home, and acquisition and capital gains taxes will be heavily levied on owners of multiple homes.
In the greater capital area and regulated areas, the mortgage loan limit will be applied differentially by market price: ▲ dwellings at 1.5 billion won or less: 600 million won ▲ dwellings over 1.5 billion won and up to 2.5 billion won: 400 million won ▲ dwellings over 2.5 billion won: 200 million won. In particular, for the loan-to-value (LTV) ratio for home purchases within regulated areas, even those without a home will see the cap lowered from the existing 70% to 40%. Those who already own dwellings face an LTV of 0%, effectively shutting off loans at the source.
At the Cabinet meeting presided over by the president the previous day, "real estate speculation" was also mentioned as a key issue. Lee expressed concern about overheating in the real estate market in the greater capital area, including the Han River belt in Seoul, saying, "An accident will inevitably happen sometime." He also said, "There are cases suspected of manipulating real estate prices," adding, "These are market-disrupting acts that cause great harm to the national economy, and strict measures must rightfully follow." Comparing the rise in home prices in the capital region to Japan's "asset bubble burst," Lee also said, "Real estate prices are overvalued, and there is a very high possibility that, at some point, we will become like Japan. Isn't this a game of passing the bomb? It will explode someday."
On May 8, about a month before the 21st presidential election, Lee appeared on the economic YouTube joint talk show "Economy Toktok" and, regarding real estate policy, said, "There is no way to stop people from approaching housing as an investment or speculative vehicle. Many side effects have arisen from trying to forcefully block that." The point was not to repeat the "real estate missteps" of the previous Moon Jae-in administration, but to create alternative investment destinations outside real estate. Citing his previous conviction that "housing is for residence," he said, "In hindsight, that is impossible."
At the time, Lee said, "Ideologically, the notion that 'housing is for residence and should not be for investment or speculation' is correct, and I have made many arguments based on that belief," adding, "But that is impossible. It is an ought-to-be; reality is not like that." He then said, "If it is not an investment vehicle and someone actually intends to live there, supply enough housing, but let's not stop those who insist on buying a home for investment," and added, "Rather than pounding them with taxes to suppress it, let's leave that market alone."