The Seoul city government is tightening its monitoring of home prices in Mapo and Seongdong districts, but it is seen to be cautious about designating them under the land transaction permit system. The permit system in the three Gangnam districts (Gangnam, Seocho, Songpa) and Yongsan is expected to remain in place.
According to the Seoul city government and the real estate industry on the 17th, the city plans to convene the 15th Urban Planning Committee meeting today to discuss extending the land transaction permit system in the three Gangnam districts and Yongsan. It is also known that the meeting will decide whether to designate Mapo and Seongdong under the system. The permit system, which expires across the three Gangnam districts and Yongsan at the end of this month, is highly likely to be extended.
However, the Seoul city government is taking a cautious stance on designating Mapo and Seongdong under the permit system. Because of this, there is word that the committee may not even take up the agenda item to designate Mapo and Seongdong.
A Seoul city official said of the likelihood of designating Mapo and Seongdong under the permit system, "We are monitoring." The official added, "Whether to designate the three Gangnam districts and Yongsan under the permit system will be discussed by the committee."
A person well-versed in Seoul's real estate policy said, "As I understand it, this committee meeting is not leaning toward designating Mapo and Seongdong under the permit system."
The land transaction permit system designates certain areas where real estate transactions require authorization from the head of the relevant district office. Sales contracts concluded without authorization are rendered void. The aim is to curb speculative demand and steer transactions toward end-users.
Initially, the prevailing view in the market was that Mapo and Seongdong would be put under the permit system. According to the Korea Real Estate Board (REB)'s weekly apartment price trends survey (as of 8th), apartment sale prices in Seongdong rose 0.27% from the previous week. The increase widened by 0.07 percentage point (p) from the previous week's 0.20%. Mapo also climbed 0.17%, up from 0.12% the previous week. Compared with Seoul's overall apartment sale price growth rate (0.09%), the rise in apartment prices in Mapo and Seongdong stands out.
If the designation of Mapo and Seongdong under the permit system falls through, the power struggle between the Seoul city government and the central government could intensify. Shortly after the government unveiled the Sept. 7 supply plan, Rep. Cheon Jun-ho of the Democratic Party of Korea introduced a bill to amend part of the Act on Report of Real Estate Transactions, etc., to expand the designating authority to the Land Ministry.
The government and the ruling party want additional designations under the real estate regulatory framework, and, with some local governments not cooperating, intend to transfer the designation authority to the central government. The Land Ministry is reportedly reviewing expanding the permit system to Mapo and Seongdong, as well as to Gwacheon and Bundang in Gyeonggi Province. The Seoul city government says it will actively express its views on the amendment.