The Seoul city government has decided to maintain the land transaction permission system (land transaction permit) for major reconstruction and redevelopment areas such as Apgujeong, Yeouido, Mokdong, and Seongsu-dong. There are concerns that housing purchase demand will shift to areas where the land transaction permit has been lifted, such as Jamsil, Samsung, Daechi, and Cheongdam-dong, leading to a drop in transactions. Experts believe that amid the possibility of rising house prices due to the lifting of the permit, it would have been difficult for the Seoul city government to ease regulations in all areas at once.
On the 12th, the Seoul city government announced that it would begin to actively promote the lifting of the land transaction permit in areas where speculation concerns are low. As a result, the land transaction permit has been immediately lifted for 291 out of 305 apartments located in four districts, including Jamsil, Samsung, Daechi, and Cheongdam, near the Global Business Center (GBC).
However, the Seoul city government has decided to maintain the land transaction permit designation for major reconstruction and redevelopment areas in Apgujeong, Yeouido, Mokdong, and Seongsu-dong, as well as for nearby reconstruction apartments in the Global Business Center area, 34 public redevelopment sites, and 14 rapid integration planning (reconstruction, redevelopment) sites in speculation-overheated areas (Gangnam 3 districts and Yongsan-gu).
The land transaction permit is a system designed to prevent speculative transactions in areas designated for development or where speculation is a concern, requiring prior approval from the district head when conducting transactions of land, dwellings, or commercial properties above a certain size. When the land transaction permit is applied, transactions involving dwellings are only permitted for actual residence purposes for two years, making it difficult to purchase a home with rental or lease considerations, a practice known as 'gap investment.'
As the major reconstruction and redevelopment areas such as Apgujeong, Yeouido, Mokdong, and Seongsu-dong are excluded from the list of land transaction permit lifting by the Seoul city government, discontent is arising in these regions. One resident in the area noted, "The anticipation of the lifting of the land transaction permit had led to a rise in house prices, but with this announcement, it seems that we will remain stuck in place."
However, there is also an expectation in these areas that since the Seoul city government has begun to lift the land transaction permit, the designation will not last long. One certified real estate agent in Mokdong stated, "It doesn't seem likely that the land transaction permit will be maintained for long," adding that, "With the hope that the designation will soon be lifted, I don't think prices will drop."
Experts predicted that areas like Apgujeong, Yeouido, Mokdong, and Seongsu-dong, where the land transaction permit is maintained, would keep market conditions similar to the current state. There are also forecasts that with housing demand shifting to areas where the permit has been lifted, the potential for rising house prices in these areas will decrease.
Lee Eun-hyung, a research fellow at the Korea Construction Policy Research Institute, stated, "In areas where the land transaction permit is maintained, the regulations will apply similarly as before, so there shouldn't be any significant impact." Kim Hyo-seon, a real estate specialist at NH Nonghyup Bank, noted, "If there is substantial demand for actual residence and investment revenue in areas like Jamsil, Samsung, Daechi, and Cheongdam, then for areas such as Apgujeong, Yeouido, and Mokdong, the nature of the demand is for reconstruction purposes in terms of housing purchases, suggesting that the impact in regions where the permit is to be maintained may not be significant."
Seo Jin-hyung, a professor at Kwangwoon University’s Department of Real Estate Law, projected, "Since demand is likely to concentrate in areas where the land transaction permit is lifted, these areas may have the potential for price increases, whereas those areas where the permit is not lifted will not have such potential."
Experts indicated that the Seoul city government's decision was driven by concerns over the adverse effects of rising house prices. Professor Seo explained, "The Seoul city government must also bear the burden of the potential sudden price surge that could occur if the land transaction permit is lifted all at once, so it seems that leaving certain areas under regulation reflects a policy judgment."
The Seoul city government stated that the lifting of the land transaction permit in these areas will be determined based on the potential for speculation. The city remarked, "We will maintain the land transaction permit in these areas as currently, but if we determine that the likelihood of speculation is low after obtaining the management disposal plan approval, we will promote lifting the permit," adding that, "After management disposal approval, the application for distribution by union members ends, and the rights situation is finalized, which suggests that there is a low likelihood of speculation."