With the Oct. 15 real estate measures designating all of Seoul and 12 areas in Gyeonggi as speculative overheating districts, areas subject to adjustment, and land transaction permit zones, concerns are emerging that the projects for the Phase 1 new towns in the greater Seoul area—target sites for the old planned-city maintenance program—will be put on hold.
According to the maintenance industry on the 31st, under the Oct. 15 measures, members of reconstruction business sites that had already obtained approval to establish a cooperative and members of redevelopment zones whose management and disposal plans were approved as of the date of the regulatory-zone designation notice can no longer transfer their membership status. Among the Phase 1 new towns (Ilsan in Goyang, Bundang in Seongnam, Jung-dong in Bucheon, Pyeongchon in Anyang, and Sanbon in Gunpo), Bundang and Pyeongchon fall under the regulatory zones.
Those who cannot afford to pay their cost shares need to sell their apartments to transfer their membership status and move elsewhere, but under the Oct. 15 measures, status transfer after cooperative establishment has become impossible. The number of dwellings supplied to members is limited to one household, and re-winning allotments in maintenance-project sales is restricted for five years, prompting pushback from owners of multiple homes in the regulatory zones.
Loan regulations were also tightened, such as capping the loan-to-value (LTV) ratio for mortgage loan collateral at 40% from 70%, increasing the burden on members, and making it impossible to sell dwellings after establishing a cooperative.
Some complexes are considering delaying the project promotion process. An official with a reconstruction promotion committee in Pyeongchon said, "There are quite a few owners of multiple homes among the members, and many say they are in various kinds of trouble, so there is talk of briefly slowing the project. For now, the mood is to push ahead, but the more opposition grows, the more difficult the decision will be."
In particular, unlike other Phase 1 new towns, Bundang has had its special maintenance zone designation volume frozen, and additional designations next year are impossible, making even cooperative establishment uncertain and prompting reactions that the damage will be significant. Earlier, the Ministry of Land, Infrastructure and Transport froze Bundang's special maintenance zone designation volume for next year at 12,000 households, saying relocation measures were insufficient. Project volume not designated this year will not be carried over to next year, making additional designations difficult.
In Pyeongchon as well, many residents said the existing project method made the cost shares burdensome, leading to reactions that the ban on transferring member status will have a negative impact.
An official at Bundang A Certified Real Estate Agency said, "Construction and material costs have risen so much recently that quite a few people in Bundang are finding it hard to shoulder the cost shares, and the regulations have added one more thing to worry about."
An official at Pyeongchon B Certified Real Estate Agency said, "As the Phase 1 new town maintenance projects were designated as pilot districts, asking prices once rose and inquiries surged, but overall it has been quiet since the regulatory announcement," adding, "If a cooperative is established, sales are expected to be blocked for a long period, so transactions will fall further."
Experts noted that although the old planned-city maintenance program was implemented to expand supply in the greater Seoul area, the Oct. 15 measures will delay supply. Seo Jin-hyung, a professor of real estate and legal affairs at Kwangwoon University, said, "Reconstruction projects in the new towns under the special law for Phase 1 new towns will be broadly put on the brakes by these real estate measures," adding, "As project promotion slows, the supply of dwellings will inevitably face disruptions."
Ko Jun-seok, a chief professor at Yonsei University Sangnam Institute of Management, said, "Above all, the big issue is that funds are tied up by the regulations. Members with complex interests will not easily agree to cooperative approval," adding, "The goal of expanding supply in the greater Seoul area is ultimately to stabilize real estate prices, but if supply is delayed, prices are highly likely to rise."