Recently, the three districts of Gangnam in Seoul (Gangnam, Seocho, and Songpa) and Yongsan will be immediately designated as land transaction permission zones. Following the lifting of the land transaction permission system (LTPS) in Jamsil, Samsung, Daechi, and Cheongdam last month, the surge in house prices due to gap investment has become evident, leading to an expansion of regulatory areas beyond the reassignment of LTPS in the lifted regions. The government and Seoul City emphasized that this is a 'preemptive measure' for housing price stabilization.
On the morning of the 19th, the Ministry of Land, Infrastructure and Transport, Seoul Metropolitan Government, Ministry of Economy and Finance, Financial Services Commission, Bank of Korea, and Financial Supervisory Service held a 'real estate regulatory agency meeting' at the Government Seoul Building in Jongno and announced this information.
The government will designate all 2,200 apartment complexes, approximately 400,000 dwellings, located in Gangnam's three districts and Yongsan as land transaction permission zones. The period is from the 24th of this month to September 30th, lasting for six months. Typically, the designation period for LTPS is one year, but it has been halved to reflect market conditions quickly. Existing LTPS zones will continue to follow their previously notified designation periods. The effectiveness of the land transaction permission zone designation will apply regardless of nationality.
The government and Seoul City are actively considering the additional designation of land transaction permission zones in nearby areas if market overheating persists in the future. In particular, if market overheating continues after the designation of land transaction permission zones, the government and Seoul City plan to actively review additional designations of adjustment areas and speculative overheating zones currently designated in Gangnam's three districts and Yongsan. Mayor Oh Se-hoon noted, 'If there is significant volatility in nearby areas due to a balloon effect, additional land transaction permission zones may be designated.'
The current land transaction permission zones within Seoul, including Apgujeong, Yeouido, Mokdong, Seongsu-dong, and the New Deal project areas, will maintain their status until concerns about market overheating are completely resolved.
The government plans to stabilize the overheating real estate market by strengthening loan management. In addition to the current monthly and quarterly household loan management system, targeted household loan monitoring will be conducted, particularly in the metropolitan area. Inspections of housing mortgage loans in key areas of Seoul will be intensified. The financial sector will manage household loans related to multiple homeowners and gap investors more strictly based on self-regulation.
The reduction in the guarantee ratio for Jeonse loan guarantees by the Korea Housing Finance Corporation (HUG), originally scheduled for July, will be advanced to May by two months. If the increase in policy loans such as the Ditto loan contributes to overheating in the Seoul and metropolitan housing market, additional interest rate hikes will be immediately pursued.
In addition, the government will continue to promote the expansion of dwelling supply. The government plans to operate a joint inspection team with the Ministry of Land, Infrastructure and Transport and Seoul City to monitor irregular transactions and housing price collusion, focusing on eradicating speculative demand and illegal activities, while also conducting planned investigations into irregular loans and occasional inspections of fund sources.
The stabilization measures for the housing market are a response to the rapid increase in house prices following the lifting of the LTPS for 291 apartments in the Jamsil, Samsung, Daechi, and Cheongdam area on the 12th of last month. House prices in Seoul have shown an expansion of increases centered around the three districts of Gangnam, gradually spreading to most autonomous districts in Seoul since the end of February. Notably, the ratio of entry into the three districts of Gangnam consistently fell from July of last year to January of this year but rebounded from February. The gap investment ratio also displayed a significant rebound in February, especially in high-value regions.
The government and Seoul City emphasized that this action represents a proactive step toward stabilizing housing prices. Minister of Land, Infrastructure and Transport Park Sang-woo stated, 'The housing market is showing signs of instability again,' adding, 'Housing prices in key regions of Seoul and the metropolitan area are unusually rising rapidly, and this trend is also spreading to surrounding areas.' He continued, 'If speculative demand increases when house prices rise, the instability of the housing market and price volatility will expand further, posing significant threats to the national economy and housing stability for the public.' He stated that if housing market instability continues and spreads even after this stabilization measure, they plan to review various response measures, including finance, taxation, and policy loans, without any restrictions and consider exceptional additional measures.
Mayor Oh stated, 'It's truly painful to see that the lifting of the LTPS has led to a rapid increase in prices,' explaining that 'the reassignment of the LTPS within a month reflects the willingness to address volatility early.' He continued, 'Regulations should be used minimally when unavoidable, but government intervention is necessary if the market is distorted due to monopolies or speculation.' He added, 'In the future, while expanding private sector dwelling supply through regulatory reforms, we will respond firmly to any abnormal market trends.'