Land Transaction Permission Zones: Decreasing Listings and Rising Prices

Contrary to Government Expectations for Housing Price Stability, Supply Plummets Leading to Consecutive Record Highs
Jamsil5, 76㎡ Sold for 2.183 Billion KRW... Surpassing Last December's Peak

Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Kim Yuri] Concerns are being raised that the government's designation of land transaction permission zones in Seoul's Gangnam area is instead contributing to housing price instability. Contrary to the government's expectation that demand would decrease and prices would stabilize due to stringent permit conditions, supply has sharply declined, leading some complexes to consecutively set new record prices.

According to the Seoul Real Estate Information Plaza on the 19th, a 76㎡ unit (exclusive area) in Jugong Complex 5, Jamsil-dong, Songpa-gu, which is designated as a land transaction permission zone, was reported as an actual transaction on the 18th of last month for 2.183 billion KRW (15th floor). This price surpasses the peak of 2.1556 billion KRW recorded in December last year. Similarly, a 76㎡ unit in Eunma, Daechi-dong, Gangnam-gu, was reported as an actual transaction for 2.05 billion KRW (2nd floor) last month. This is the highest price this year, up 80 million KRW compared to the transaction price before the land transaction permission zone designation on June 23 (1.97 billion KRW). Although this is 100 million KRW lower than the all-time high of 2.15 billion KRW in December last year, real estate agencies note that this unit is on a lower floor, which is less preferred.

Therefore, despite the government designating four neighborhoods?Daechi-dong, Samseong-dong, Cheongdam-dong in Gangnam-gu, and Jamsil-dong in Songpa-gu?as land transaction permission zones to stabilize housing prices, the expected effects have not materialized. Since June 23, purchasing a house in these four neighborhoods requires approval from the district office chief, and properties with existing lease contracts cannot be sold. Conditions such as a minimum of two years of actual residence have also become more stringent.

However, transaction volumes in these areas have sharply declined. In June, apartment sales were 259 in Jamsil-dong, 134 in Daechi-dong, 122 in Samseong-dong, and 43 in Cheongdam-dong, but last month these numbers dropped to 18, 15, 15, and 8 respectively. Even considering the temporary surge in transactions before the designation and the reporting deadline last month, this is a clear contraction in transactions. The head of real estate agency A in Daechi-dong explained, "There is steady demand due to good school districts, the Samseong-dong Global Business Center (GBC), and Yeongdong-daero development, but because transaction conditions are strict, the scarcity of listings has increased."

Yoon Ji-hae, senior researcher at Real Estate 114, said, "Land transaction permission zones are a special market where transactions are more difficult, but since the market has already been significantly reorganized around actual demanders and despite strengthened regulations, listings are not flooding the market, causing a phenomenon where a small number of transactions are driving prices up," and predicted, "This similar trend is expected to continue through the second half of this year."

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