The government additionally designated all of Seoul and 12 areas in Gyeonggi Province as land transaction permit zones. By barring purchases of homes in Seoul and the greater capital area without actual residence, it completely blocked so-called "gap investment." At the same time, the government designated these areas as regulated zones and increased the tax burden on multiple-home owners.
The maximum collateral loan limits for dwellings priced over 1.5 billion won in the greater capital area and regulated zones will also be cut by up to 400 million won. For apartments priced 1.5–2.5 billion won, the limit will be 400 million won, and for apartments over 2.5 billion won, the limit will be 200 million won.
The Ministry of Land, Infrastructure and Transport, the Ministry of Economy and Finance, the Financial Services Commission, the Office for Government Policy Coordination (OPC), and the National Tax Service held a meeting of real estate-related ministers at the Government Complex Seoul in Jongno-gu, Seoul, on the 15th and announced measures to stabilize the dwellings market.
As apartment prices in river-adjacent districts such as Seongdong, Mapo, Gwangjin, and Yeongdeungpo began rising in late August and the trend spread across Seoul while the pace of home price increases expanded in Gyeonggi areas adjacent to Gangnam, the government announced additional real estate measures.
With these measures, all 25 districts of Seoul were bundled as land transaction permit zones and regulated zones (adjusted areas and speculative overheating districts). In Gyeonggi, a total of 12 areas were designated as land transaction permit zones and regulated zones: ▲ Gwacheon-si ▲ Gwangmyeong-si ▲ Seongnam-si Bundang-gu, Sujeong-gu, Jungwon-gu ▲ Suwon-si Yeongtong-gu, Jangan-gu, Paldal-gu ▲ Anyang-si Dongan-gu ▲ Yongin-si Suji-gu ▲ Uiwang-si ▲ Hanam-si. The current designations for the private land sale price cap zones and speculative zones will remain limited to Seoul's three Gangnam districts and Yongsan-gu.
Apartments in these areas and row houses and multiplex dwellings within the same complexes as those apartments are subject to regulation. Previously, in the three Gangnam districts (Gangnam, Seocho, Songpa) and Yongsan-gu, which had already been designated as regulated zones and land transaction permit zones, only apartments were regulated, but going forward, row houses and multiplex dwellings within the same apartment complexes will also be covered. The land transaction permit zone designation runs from the 20th of this month to Dec. 31 next year. The regulated zone designation takes effect on the 16th of this month.
Initially, expectations were high that the government would impose a "pinpoint regulation" by designating the Seoul Han River belt, where home prices were rising markedly, along with Seongnam-si Bundang and Gwacheon, as regulated zones. However, concerned that a phased expansion of regulated zones could trigger a balloon effect that lifts prices in adjacent areas, the government designated all of Seoul and 12 areas in Gyeonggi as regulated zones and land transaction permit zones at once.
Kim Yun-duk, Minister of the Ministry of Land, Infrastructure and Transport, said, "Taking into account overall factors such as recent dwellings price and land price growth rates and transaction trends, we will focus designation on areas where the dwellings market is overheating or where there are concerns that overheating could spread to surrounding areas."
Areas bound as land transaction permit zones will be subject to a two-year actual residence requirement from the date of acquisition. So-called gap investment, buying a home with a tenant's jeonse deposit in place, will be impossible. With the regulated zone designation, the loan-to-value (LTV) ratio for home mortgage loans will be tightened from 70% to 40%. In land transaction permit zones, the LTV for non-dwelling mortgage loans secured by non-residential properties such as stores and factories will be reduced to 40%.
The limit on home mortgage loans for dwellings priced over 1.5 billion won within the greater capital area and regulated zones will also be enforced. The current maximum loan limit is 600 million won, but going forward, the allowable loan limit will be segmented by apartment price brackets. For apartments priced 1.5–2.5 billion won, home mortgages will be available up to 400 million won. For apartments priced over 2.5 billion won, home mortgages will be capped at 200 million won. The home mortgage limit for dwellings priced at 1.5 billion won or less will remain at the current 600 million won.
The government will also begin a review to overhaul the real estate tax system. The Ministry of Economy and Finance plans to prepare rational tax measures to adjust holding and transaction taxes and to ease demand concentration in specific areas through commissioned research and discussions by an interagency task force (TF).
Crackdowns on illegal real estate transactions and the inflow of speculative demand will also be strengthened. The government will establish a supervisory body for real estate illegal activities under the prime minister and operate an investigative unit under it to directly investigate and probe illegal real estate transactions.
Along with these demand-suppression measures, the government will also accelerate the supply of dwellings. The Ministry of Land, Infrastructure and Transport will convene a "dwellings supply inspection task force (TF)" every other week with related ministries, local governments, and the Korea Land & Housing Corporation (LH) to review progress by supply task.
In particular, the plan to supply 1.35 million dwellings in the greater capital area announced in the 9/7 measures will be pushed within the year. A plan to supply dwellings using old government buildings and state-owned or public land will be announced soon. For Seoul Seongdae Baseball Stadium and the Wirye office site, preliminary feasibility studies for public institutions will be exempted to proceed with site acquisition procedures, and the plan to supply 4,000 dwellings in Seoul will be pushed forward without disruption.
Minister Kim said, "If we miss the golden time for stabilizing the dwellings market, it could become even harder for people to buy homes and stabilize their housing," adding, "We will put dwellings market stabilization at the top of government policy priorities and respond with all-out efforts across related ministries."