The hearing date for the lawsuit seeking to invalidate the Oct. 15 real estate measures that designated all of Seoul as regulated areas (adjustment target areas and overheated speculation districts) is three days away. After this hearing, the court is expected to rule as early as next month on whether there were procedural problems in designating parts of Seoul and Gyeonggi as regulated areas. The Ministry of Land, Infrastructure and Transport, which is preparing follow-up measures to stabilize the real estate market, is closely watching the outcome of the lawsuit as the credibility of its policy hinges on this ruling.
According to the government and the real estate industry on the 12th, the Seoul Administrative Court will hold a hearing on the 15th of this month for administrative lawsuits and applications for injunctions seeking to cancel the designation of eight areas as adjustment target areas. The bench plans to conclude the hearing in a single session that day and issue a decision.
This lawsuit was filed by the Reform Party, which argued that eight areas—Dobong, Gangbuk, Geumcheon, and Jungnang districts in Seoul; Uiwang in Gyeonggi; Jungwon in Seongnam; and Jangan and Paldal districts in Suwon—were included as adjustment target areas due to intentional data omission by the Ministry of Land, Infrastructure and Transport (MOLIT), and asked the court to invalidate the designations. The Reform Party believes MOLIT intentionally used June–August, not July–September, dwelling price growth statistics to include these eight areas as adjustment target areas.
MOLIT fully denies these claims. As the validity of the real estate measures will be decided after a single hearing, MOLIT is focusing its efforts on the lawsuit, including hiring the major law firm Gwangjang. If the court rules in this case that the designation procedures for the eight areas as adjustment target areas were not lawful, it would significantly hinder MOLIT's policy execution. MOLIT is also concerned that if the eight areas are de-designated as adjustment target areas without prior preparations, market volatility could increase.
If the Reform Party wins, the bench is expected to immediately suspend the effect of the adjustment target area designations. The Oct. 15 measure's restrictions on these eight areas would be effectively lifted even with just a first-instance victory. Even if the lawsuit drags on, the relevant restrictions would remain lifted during the proceedings.
An opposition figure said, "We filed an administrative lawsuit to cancel the designations for the eight areas and applied for an injunction to 'suspend the effect,' but the bench did not address it separately due to its large potential impact on the market," and added, "Instead, if the first-instance ruling comes out in favor of the plaintiffs, then the effect will be suspended."
Among the eight areas mentioned in the lawsuit, five—Dobong, Gangbuk, Geumcheon, and Jungnang districts in Seoul, and Jangan district in Suwon, Gyeonggi—had dwelling price growth rates from September to November below 1.3 times the inflation rate, which is the threshold for designation as a regulated area. As they did not meet the criteria for adjustment target areas, there is a possibility they could be de-designated even without a court ruling.
According to Article 72-3 of the Enforcement Decree of the Housing Act, "Areas where the dwelling price growth rate for the three months retroactive from the month immediately preceding the month in which the designation as an adjustment target area is made exceeds 1.3 times the consumer price inflation rate of the city/province to which the area belongs" can be designated as adjustment target areas.
However, in the follow-up dwelling supply measures to be announced this month, the likelihood that MOLIT will adjust regulated areas or land transaction permit zones appears low. With the real estate market still unstable, lifting regulated areas could trigger a balloon effect of rising home prices, making it difficult for MOLIT to easily lift the designations.
A National Assembly Land, Infrastructure and Transport Committee official said, "There have been rumors in the market about lifting regulated areas and land transaction permit zones, but as far as I know there has been no additional word at the government or party level yet."
With the court expected to issue a ruling as early as next month after just one hearing, the validity of MOLIT's real estate policy is also likely to be decided. An opposition figure said, "It usually takes about a month to reach a ruling, but the bench seems intent on moving quickly," adding, "For now, the hearing is very likely to conclude in a single day."