The official from a real estate agency in Jamsil-dong, Songpa District, said, "Since the policy was announced, we have received many inquiries. The asking prices have risen so much that transactions have not yet occurred."
With the lifting of the land transaction permission system (LTPS), real estate around Jamsil-dong in Songpa District, particularly in areas known as Jam-Sam-Dae-Cheong (including Jamsil-dong, Samseong-dong, Daechi-dong, and Cheongdam-dong in Gangnam District), is receiving significant attention in the market. Recently, the impact is being felt not only in the lifted areas in Songpa District but also in areas designated for redevelopment that have not yet been lifted.
According to the Korea Real Estate Board's weekly apartment price trends released on the 7th, as of the first week of March (3rd), home prices in Seoul increased by 0.14%, which is a larger increase than the previous week (0.11%). Among the 25 autonomous districts in Seoul, the district with the highest increase was Songpa District, which rose by 0.68% on a weekly basis. This marks a larger increase compared to the previous week (0.58%).
As asking prices have surged, actual transactions remain few. The official from a real estate agency in Jamsil-dong, Songpa District, noted, "Since the announcement of the lifting of the LTPS, numerous reports have emerged, causing homeowners to withdraw their listings," adding, "Inquiries from buyers are at a meaningless level. Most give up and walk away when they hear the prices."
Homeowners of major complexes, known as El-Lee-Tr, including Jamsil Els, Risents, and Trizium, are shifting their focus to redevelopment complexes such as Jugong 5th Complex, Woosung 1, 2, and 3, Woosung 4th, and Jugong 5th Complex, which have not had the LTPS lifted. According to the Ministry of Land, Infrastructure and Transport's real transaction disclosure system, a 76 square meter unit in "Jugong Apartment 5th Complex" was sold for 3.177 billion won on the 27th of last month, an increase of 70 million won from the 3.1 billion won it was sold for the previous month.
An official from a real estate agency near Jamsil Woosung 1, 2, and 3 districts stated, "Since the lifting of the LTPS, there is significant demand from El-Lee-Tr homeowners who wish to sell their homes at high prices and transition to Woosung Apartments or Jugong 5th Complex." They added, "Even though these buildings are older and will require a lot of time until the maintenance project is completed, those who have succeeded in buying and selling are often willing to spend more than 100 million won on renovations to stay until the maintenance project commences."
Experts assessed that the LTPS acted as a mechanism to raise home prices in a situation where there were many onlookers in the three districts of Gangnam. Kim Hyo-sun, a senior real estate commissioner at NH Nonghyup Bank, remarked, "There was a significant possibility of price rises due to mixed demand for transitioning within Seoul and investment demand from local areas seeking to invest in Seoul. The lifting of the LTPS has pulled the trigger leading to overheating; however, outside of major areas like Gangnam or along the Han River, the pace at which asset values follow has slowed, indicating that the heat in Gangnam is unlikely to spill over to other regions."
Concerns have been raised regarding the effectiveness of the LTPS as it has failed to prevent price increases in areas where the LTPS has not been lifted. Park Hap-soo, an adjunct professor at Konkuk University's Graduate School of Real Estate, stated, "While it is difficult to say that the lifting of the LTPS has had no impact at all, the demand in Seoul is shifting due to future asset values and a shortage of housing supply. Therefore, the effectiveness of the LTPS is significantly diminished. Even in areas where the LTPS has not been lifted, such as Apgujeong Hyundai Apartment, it is common to see record highs being rewritten." He further explained, "Rather than properly functioning as a price suppression mechanism, it has only led to adverse effects such as violations of property rights. While it is unavoidable to maintain the LTPS in areas where speculation is a concern, the inclusion of general apartments like Jamsil was excessive regulation."