Government Maintains Current Nationwide Real Estate Regulation Zones... "1-2 Months Additional Monitoring"

Held Housing Policy Deliberation Committee Meeting to Discuss Regulatory Area Adjustment Plan
7 Areas Did Not Meet Quantitative Requirements but Decided to Maintain Current Status
Concerns Over House Price Increase Due to Balloon Effect if Regulations Are Lifted

[Image source=Yonhap News]

[Asia Economy Reporter Moon Jiwon] The government reviewed the adjustment plan for regulated areas such as speculative overheated districts and adjusted target areas but decided to maintain the current regulated areas. This decision reflects concerns that lifting regulations could lead to a surge in buying demand in those areas, causing the real estate market to overheat again.

On the 30th, the Ministry of Land, Infrastructure and Transport held a Housing Policy Deliberation Committee meeting to review the adjustment plan for adjusted target areas and speculative overheated districts but decided not to take any adjustment measures such as lifting regulations. This review was conducted in accordance with the amended Housing Act, which requires a semi-annual reassessment of whether to maintain regulated areas considering housing price stability and changing conditions in the respective regions.

According to the Ministry, as of that day, there are a total of seven areas nationwide among the adjusted target areas and speculative overheated districts that no longer meet the quantitative criteria set at the time of designation. Among these, six are adjusted target areas: Dong-gu and Seo-gu in Gwangju, Nonsan in Chungnam, Suncheon and Gwangyang in Jeonnam, and Seongsan-gu in Changwon, Gyeongnam; and one is a speculative overheated district: Uichang-gu in Changwon, Gyeongnam.

Normally, areas that fail to meet the quantitative criteria should be removed from the regulated areas, but the government decided to maintain the regulated areas based on qualitative judgments from the perspective of market stability, considering that lifting regulations could affect not only the designated areas but also neighboring housing markets.

Although the real estate markets in these areas currently appear stable, lifting regulations could cause side effects such as a 'balloon effect,' leading to a rise in housing prices again. Private committee members of the Housing Policy Deliberation Committee also reportedly agreed on the need for a cautious approach to lifting regulations, considering the high housing price growth rates in both the metropolitan area and provinces due to ultra-low interest rates, household debt, and expectations of deregulation.

During this meeting, there was also discussion about additionally designating some non-regulated areas where signs of housing price overheating have recently been detected, but the Ministry of Land, Infrastructure and Transport decided not to add any areas based on the committee’s review results.

This decision was made because many variables affecting the housing market remain, such as the introduction of DSR regulations in the second half of this year, supply expansion under the 2·4 Plan, and the Bank of Korea’s expected base interest rate hikes, necessitating further market monitoring.

The Ministry explained, "We will conduct additional market monitoring over the next one to two months and then reconsider whether to partially lift or additionally designate regulated areas."

Accordingly, 111 adjusted target areas and 49 speculative overheated districts were maintained.

In adjusted target areas, the loan-to-value ratio (LTV) is limited to 50% for housing priced under 900 million KRW and 30% for the portion exceeding 900 million KRW, with a debt-to-income ratio (DTI) of 50% applied. In speculative overheated districts, stronger loan regulations apply, with an LTV of 40% for housing priced under 900 million KRW and 20% for the portion exceeding 900 million KRW.

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