Ahead of LTV Relaxation, Mid-to-Low Priced Apartments Start Aligning to '900 Million Won' Threshold

July Mortgage Loan Regulations Eased for Non-Homeowners
LTV Preferential Threshold Raised from 600 Million to 900 Million KRW
Apartment Asking Prices Under 900 Million KRW Increase

[Asia Economy Reporter Ryu Tae-min] Concerns are rising that the easing of loan regulations for non-homeowners starting next month will drive up prices of mid-to-low priced apartments. This is because the actual demand, which was previously concentrated on apartments priced below 600 million KRW, is spreading to apartments in the 600 million to 900 million KRW range, increasing the likelihood that prices will be adjusted upward to the loan ceiling of 900 million KRW.

According to industry sources on the 16th, financial authorities will increase the LTV preferential rate for non-homeowners from the current 10 percentage points to 20 percentage points starting July 1st, and expand the eligible housing price from below 600 million KRW to below 900 million KRW. As a result, signs of price increases in this price range are emerging in the market.

The market expects price increases to be centered on apartments priced between 600 million and 700 million KRW, where the loanable amount will increase the most due to this regulatory easing. For example, if a non-homeowner purchases a 700 million KRW apartment in a speculative overheating district, the existing LTV allowed a loan of up to 280 million KRW. However, from July, the maximum loan amount will increase to 400 million KRW, an increase of 120 million KRW. This is twice the increase compared to a 600 million KRW apartment, where the loanable amount rises by up to 60 million KRW (from 300 million to 360 million KRW).

In fact, apartments priced below 900 million KRW in the metropolitan area are seeing asking prices rise daily. The average actual transaction price last month for a 59㎡ (exclusive area) apartment in Sinnye 6 Complex, Sinnye-dong, Jungnang-gu, Seoul, was between 600 million and 650 million KRW, but the current asking price for the same size unit has risen to between 700 million and 750 million KRW. A representative from nearby A Real Estate Agency said, "As more people are looking for mid-to-low priced complexes recently, asking prices have risen by about 40 to 50 million KRW within a few weeks," adding, "Some homeowners have even withdrawn their listings, anticipating further price increases due to the loan easing."

Ye Gyeong-hee, Senior Researcher at Real Estate 114, said, "With the change in the apartment criteria for LTV preferential treatment, a price adjustment phenomenon around 900 million KRW is expected," and added, "The number of actual buyers moving to Seoul and Gyeonggi areas, where mid-to-low priced apartments are concentrated, is also expected to increase."

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