Tense over Rising House Prices, Oh Proposes Land Transaction Permit System

Record High Prices in Reconstruction Complexes
Regulatory Easing and Measures to Prevent Housing Price Increases Likely to Be Implemented Together

Seoul Mayor Oh Se-hoon is attending the Cabinet meeting held at the Government Seoul Office in Jongno-gu, Seoul, on the morning of the 13th. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporters Kim Hyemin and Lim Onyu] As signs emerge that prices of reconstruction apartments are set to surge amid expectations of deregulation, Seoul Mayor Oh Se-hoon has pulled out the land transaction permit system card. He has also stepped back from his strong signal to lift regulations within a week. Although he was elected on the promise of ‘speedy supply,’ evaluations suggest he has begun to adjust the pace due to concerns about stimulating housing prices.

According to the Seoul city government on the 14th, Mayor Oh is considering designating areas where housing prices have overheated due to the reconstruction deregulation issue as land transaction permit zones.

Mayor Oh appeared on a broadcast the day before and said, "If surrounding housing prices are stimulated, there is an administrative measure that can be used, such as designating the area as a land transaction permit zone." If an area is designated as a land transaction permit zone, residents must obtain approval from the district mayor when trading houses, and buying, selling, or leasing is prohibited for two years, requiring actual residence. This is why the land transaction permit system is perceived as a means to prevent speculation. Regarding his election promise to ease reconstruction regulations within a week, Oh said, "It was an expression of will," adding, "I think we need to proceed quickly but cautiously with supply policies," lowering the tone.

The reason Mayor Oh mentioned housing price stabilization before signaling deregulation appears to be because a series of record-high prices have continued in reconstruction complexes around the time of his election.

In particular, the Apgujeong-dong area in Gangnam-gu, where the highest-priced complexes in the country are concentrated, has seen prices surge as reconstruction speeds up to avoid the two-year actual residence obligation under the June 17th measures last year. On the 5th, two days before the by-election, a 245.2㎡ unit in Hyundai 7th Complex was sold for 8 billion KRW, setting a new record price. This is a 1.3 billion KRW increase compared to the actual transaction price of 6.7 billion KRW in October last year. The Apgujeong 3 District (Hyundai 1-7, 10, 13, 14 Complexes, and Daerim Villart) is seeing prices fluctuate as the reconstruction association establishment approval is imminent. A representative from a real estate agency in Apgujeong-dong explained, "Owners have come together to avoid the two-year actual residence requirement, accelerating project progress, and with the change of the Seoul mayor, expectations of deregulation have increased, leading to the depletion of high-priced listings."

The atmosphere is similar in Mok-dong, Yangcheon-gu, where reconstruction projects were blocked due to strict safety inspections. On the 17th of last month, a 122.3㎡ unit in Mok-dong New Town 13 Complex changed hands for 2.15 billion KRW, breaking the previous record of 2 billion KRW set in January. In Nowon-gu’s Sanggye-dong Jugong 7 Complex, a mid-to-low priced reconstruction project, a 79.07㎡ unit was traded for 1.24 billion KRW on the 15th of last month, nearly 200 million KRW higher than the 1.045 billion KRW price in September last year.

As housing prices are stimulated solely by expectations of deregulation, there is a forecast that Mayor Oh will implement policies combining deregulation with measures to prevent housing price increases. Apgujeong, which is considered a beneficiary area of deregulation and has seen significant price rises, is likely to be designated as a land transaction permit zone. The designation could also be expanded to reconstruction boom areas in northern Seoul such as Sanggye. The land transaction permit zones in Gangnam-gu’s Daechi, Cheongdam, Samsung, and Songpa-gu’s Jamsil, which are set to expire on June 22, are also likely to be re-designated.

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