In the past, the designation of land transaction permission areas for Jamsil, Samsung, Daechi, and Cheongdam-dong reduced transaction volume, but it did not curb the rising trend of housing prices. After the government and Seoul City lifted the land transaction permission areas for this region last month, a sharp increase in housing prices was observed. This indicates that even though the system will be re-implemented starting on the 24th, the trend of rising dwelling prices may not be controlled.
According to Shinhan Investment Corporation's Asset Management Consulting Department on the 23rd, an investigation of apartment transaction volumes based on the enforcement of the land transaction permission system (LTP) in June 2020 found that the transaction volume decreased in all four regions compared to the previous two years (June 2018 to May 2020) and the following two years (June 2020 to May 2022).
In Jamsil-dong, the transaction volume was 4,456 cases over the two years before the LTP took effect, but it plummeted to 814 cases after the enforcement, a decrease of over 80%. Cheongdam-dong fell from 461 cases to 178, and Daechi-dong decreased from 1,343 to 536, all more than 60%. Samsung-dong also dropped from 596 to 408.
The LTP is a system requiring municipal approval for real estate transactions to prevent speculation. Within the land transaction permission areas, dwellings are only allowed for sale for actual residency purposes for two years, and gap investment, which involves buying a house with a jeonse lease, is not possible.
Despite this decline in transaction volume, the trend of rising sales prices continued. According to data from Real Estate R114, the sales price of apartments in Daechi-dong rose by 23.8% over the two years following the enforcement of the LTP. This is a steeper increase than the rate of growth (22.7%) in the two years before the enforcement. Jamsil also saw a higher growth rate (22.5%) after regulation than before (20.8%). The sustained rise in prices is interpreted as reflecting the strengths of location, such as school districts and transportation, as well as the acceleration of reconstruction projects. In Cheongdam-dong (24.0% to 19.8%) and Samsung-dong (23.7% to 18.7%), while the rate of price increase slowed after the regulations, the upward trend continued.
The price increase trend in these regions has continued until recently. The sales price of apartments in Jamsil rose from 57.58 million won per 3.3 square meters (1 pyeong) in June 2020 to 78.98 million won last month, an increase of 37.2%. During the same period, the price of apartments in Cheongdam-dong rose from 54.82 million won to 74.18 million won, a 35.3% increase. In Daechi-dong, the price jumped from 64.37 million won to 87.45 million won, up 35.9%, and Samsung-dong rose from 57.86 million won to 76.63 million won, a 32.4% increase.
Yang Ji-young, the chief of Shinhan Investment Corporation's Asset Management Consulting Department, noted, "The LTP was introduced as a policy tool for market stability, but the actual effect shows that the side effect of increasing transaction rigidity has been more significant."