"Speculation Will Be Severely Punished" O Se-hoon Draws Sword, Question Mark Over Housing Price Stabilization

Frequent Disruptive Acts Warned to Face Disadvantages in Reconstruction Priority
Speed Adjustment in Deregulation Amid Soaring Housing Prices

Seoul Mayor Oh Se-hoon is making a statement on stabilizing the real estate market at the Seoul City Hall briefing room on the 29th. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Onyu Lim] "Housing price collusion and frequent false reports in complexes will be deprioritized in the reconstruction order."

Seoul Mayor Oh Se-hoon, who is pushing for the normalization of reconstruction and redevelopment, has taken a tough stance against disruptive activities in the real estate market. The rapid rise in housing prices in major reconstruction complexes continues, putting private-led supply measures at risk. Fearing public backlash, Mayor Oh even mentioned "speed control" and vowed strict punishment for speculative demand. However, it remains uncertain whether strengthened administrative crackdowns will lead to housing price stabilization.

On the afternoon of the 29th, Mayor Oh held a briefing at Seoul City Hall regarding real estate market stabilization, stating, "While controlling the speed of redevelopment and reconstruction, we will mobilize all possible administrative power to first eradicate disruptive activities in the real estate market." This marks a shift from Mayor Oh’s campaign stance advocating "speedy housing supply" to a policy focus on "market stabilization first, supply later."

This policy shift aims to curb the recent rapid price increases in reconstruction complexes. Since Mayor Oh took office, the "Oh Se-hoon premium" has caused actual transaction prices in major reconstruction complexes to rise by hundreds of millions of won. In response, the ruling party has raised accountability issues against Mayor Oh. Hong Ik-pyo, Policy Committee Chair of the Democratic Party, stated on the 22nd, "The price increase in areas such as Nowon-gu, Yangcheon-gu, Gangnam-gu, and Yeongdeungpo-gu, which Mayor Oh mentioned, has doubled at most," and argued, "The main cause is the declared deregulation and calls for speedy supply."

Facing potential public backlash, Mayor Oh ultimately announced that he would induce housing price stabilization by strictly punishing speculative demand. He emphasized, "Abnormal cases such as false reports, price-only increases, and price collusion continue in some reconstruction complexes," and added, "We will strictly punish speculative demand." Specifically, following additional designation of land transaction permission zones, real estate transaction monitoring will be strengthened to punish speculative trades. He warned that complexes with frequent disruptive activities or those involving residents’ representative meetings will be pushed to lower priority in reconstruction and redevelopment orders.

However, it is uncertain whether Mayor Oh’s tough measures will actually lead to housing price stabilization. During the four years of the Moon Jae-in administration, various measures such as tightened loan regulations, expanded regulated areas, and increased holding and capital gains taxes were implemented, but their effects did not last long. Professor Shim Kyo-eon of Konkuk University’s Department of Real Estate pointed out, "As long as expectations for redevelopment projects persist, administrative measures for price stabilization have limitations."

The limitations of the land transaction permission system have already been confirmed. Since June last year, Daechi-dong in Gangnam-gu has been designated as a land transaction permission zone, yet on the 1st, a 151㎡ (exclusive area) unit in Raemian Daechi Palace was traded for 5.35 billion won. This is the first time a transaction over 5 billion won has occurred in Daechi-dong. Jang Jae-hyun, Head of Real Today, predicted, "Although transaction volumes will decrease in areas like Apgujeong, Mok-dong, and Yeouido, which have become land transaction permission zones, prices will likely rise further due to clear development signals."

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