Private Apartment Sale Rights Resale Ban in Local Metropolitan Cities Starting Next Week

Amendment to the Housing Act Enforcement Decree Approved at Cabinet Meeting
Expected to Be Enforced on the 22nd After Promulgation Procedures

(Photo by Yonhap News)

[Asia Economy Reporter Moon Jiwon] Starting next week, apartment sales rights in private residential sites within the metropolitan area’s overconcentration control zones, growth management zones, and urban areas of provincial metropolitan cities will be completely banned from being resold until move-in.

On the 15th, the government held a Cabinet meeting presided over by Prime Minister Chung Sye-kyun at the Seoul Government Complex and approved the amendment to the Enforcement Decree of the Housing Act containing these measures. The decree is expected to be enforced on the 22nd after going through the promulgation process.

Accordingly, it is expected that the speculative investors aiming for short-term price gains through resale rights will withdraw not only from the metropolitan area but also from provincial metropolitan cities, cooling down the enthusiasm for subscription. Earlier, the Ministry of Land, Infrastructure and Transport announced in May plans to strengthen restrictions on the resale period of housing to ensure new housing supply is centered on actual demand.

After the amendment takes effect, apartments applying for approval of recruitment announcements for residents in the relevant areas will not be allowed to buy or sell resale rights from the announcement of winners until the registration of ownership transfer. Resale of sales rights will be prohibited.

The government significantly strengthened the resale restriction period through the amendment because speculative investments for resale rights continued by exploiting the relatively short resale restriction period in non-regulated areas, causing a surge in overheated subscription complexes. Until now, houses constructed and supplied in private residential sites in the metropolitan area and provincial metropolitan cities outside regulated areas were subject to a six-month resale restriction period.

In fact, more than 40% of the complexes supplied in the first half of this year recorded subscription competition rates exceeding 20 to 1, maintaining a high level of competition. According to an analysis by the Ministry of Land, Infrastructure and Transport, among complexes sold with subscription competition rates exceeding 20 to 1 in private residential sites in the metropolitan area and metropolitan cities from 2017 to 2019, one out of four winners sold their resale rights within six months after the resale restriction period ended. Most of these were short-term investors rather than actual residents.

According to the industry, after the government designated most areas in the metropolitan area as adjusted target areas under the June 17 measures, the subscription market heat in Incheon and Gyeonggi areas cooled down. This was because the resale restriction period was also strengthened as these areas were included in the regulated zones. In some parts of Incheon and Gyeonggi Province, subscription competition rates soared to triple digits in the first half of this year, showing enthusiasm comparable to Seoul, but recently, investment demand has drastically decreased, and competition rates have fallen to less than half.

The amendment also extended the resale restriction period for apartments supplied in provincial public residential sites from 3 years to 4 years in speculative overheated districts, and from 1 year to 3 years in other areas. Provincial speculative overheated districts include Sejong City, Suseong-gu in Daegu, and Dong-gu, Jung-gu, Seo-gu, and Yuseong-gu in Daejeon.

Originally, the Ministry of Land, Infrastructure and Transport planned to enforce the amendment from August, but the schedule was adjusted as the amendment was classified as an important regulation. A ministry official explained, "The enforcement decree was delayed somewhat due to the regulatory review process," adding, "As the resale restriction period lengthens, the chances of actual demand buyers winning will increase."

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