Suwon 3 Districts, Anyang Manan, and Uiwang Scheduled to Be Designated as Adjustment Target Areas

Designation of 5 Adjustment Areas Including 3 in Suwon, Manan in Anyang, and Uiwang
Targeted Response to Overheated Areas in Southern Gyeonggi to Prevent Balloon Effect
Loan Regulations Strengthened with LTV in Adjustment Areas Reduced from 60% to 50%

[Asia Economy Reporter Onyu Lim] It has been reported that the government's additional real estate measures to be announced on the 20th will include designating five areas?Yeongtong, Gwonseon, and Jangan districts in Suwon, Manan district in Anyang, and Uiwang city?as adjusted target areas. In addition, the measures are expected to include a loan regulation proposal to uniformly reduce the loan-to-value ratio (LTV) for mortgage loans within the adjusted target areas from 60% to 50%.

According to the Ministry of Economy and Finance, the Ministry of Land, Infrastructure and Transport, and the Financial Services Commission on the 19th, the government has decided to designate Yeongtong, Gwonseon, and Jangan districts in Suwon, Manan district in Anyang, and Uiwang city?currently non-regulated areas?as adjusted target areas to prevent the balloon effect spreading to the southern metropolitan area. The three districts in Suwon?Yeongtong, Gwonseon, and Jangan?were highly likely to be designated as regulated areas after recording a weekly apartment price increase rate in the 2% range last week.

Along with the three Suwon districts, Manan district in Anyang and Uiwang city, which will be designated as additional areas, are also showing similar market conditions. Uiwang city, adjacent to Gwacheon, saw apartment prices rise by only 0.74% in November last year according to Korea Real Estate Agency statistics, but experienced a remarkable 2.44% increase in December, highlighting the balloon effect. In January this year, prices rose by 0.83%, showing a higher increase compared to other regions. According to local real estate agents, prices surged sharply due to concentrated investment demand.

Similarly, in Anyang city, after Dongan district, which includes Pyeongchon New Town, was designated as an adjusted target area, the balloon effect has appeared in Manan district, which remains a non-regulated area. Manan district recorded a high increase rate of 0.99% in November last year, followed by 1.29% in December and 1.25% in January this year, showing a steep upward trend.

Adjusted target areas are designated by selecting regions where the housing price increase rate over the past three months, retroactively from the previous month, exceeds 1.3 times the consumer price increase rate of the city or province, and where subscription rates are high or there is a large volume of pre-sale right transactions.

However, Hanam city and Guri city, which were initially expected to be regulated, are reportedly not to be designated as adjusted target areas in this measure. Furthermore, measures to upgrade regulations on existing speculative overheated districts, speculative areas, or existing adjusted target areas have been excluded from the final discussion process.

The government also plans to strengthen loan regulations in adjusted target areas beyond the current standards. Currently, in adjusted target areas, the LTV is limited to 60%, and the debt-to-income ratio (DTI) is applied at 50%. The government plans to lower the LTV to 50%. It is also reported that there is ongoing discussion about strengthening the DTI to around the current 40% level.

Some speculate that, considering the significant rise in prices of mid-to-high-end apartments priced between 600 million and 900 million KRW in areas such as 'Nodogang' (Nowon, Dobong, Gangbuk districts) due to regulations on high-priced homes such as banning mortgage loans exceeding 1.5 billion KRW, there may be a proposal to reduce the LTV limit for the 600 million to 900 million KRW price range.

This content was produced with the assistance of AI translation services.