Designation as a Regulated Area... The Dongducheon Real Estate Market Plunged into Confusion

Gyeonggi Dongducheon 6 Districts to be Designated as Adjustment Areas from the 30th
'Housing Price Adjustment' vs 'Limited Impact' Forecasts Diverge
Increase in Contract Cancellations and Decrease in House Viewers... Concerns Over Housing Price Decline Rise
Meanwhile, Limited Impact from Loan Regulations and Optimistic Outlook Due to GTX Benefits

[Asia Economy Reporter Ryu Tae-min] "Since the announcement of the designation as a regulated area, we have been flooded with inquiry calls. Most of the preliminary contracts have practically been canceled, and I think the number of people coming to view houses will significantly decrease. (An official from a real estate agency in Jihaeng-dong, Dongducheon-si)"

The real estate market in the Dongducheon-si area of Gyeonggi Province, newly designated as a regulated area by the government, is in a state of confusion. Due to strengthened regulations, the market has frozen, raising concerns that a price correction is inevitable. However, since the overall housing prices in the metropolitan area are on the rise, there is also an argument that the impact of the regulations on Dongducheon will not be significant.

On the 27th, the Ministry of Land, Infrastructure and Transport held a Residential Policy Deliberation Committee meeting and designated six areas in Dongducheon?Jihaeng-dong, Songnae-dong, Bosan-dong, Dongducheon-dong, Saengyeon-dong, and Sangpae-dong?as regulated areas. These areas are near Jihaeng Station on Seoul Metropolitan Subway Line 1, where most of the apartments in Dongducheon are concentrated.

Since the announcement of the designation as a regulated area, mixed reactions have emerged among local residents. An official from a real estate agency in Jihaeng-dong said, "Dongducheon has been a rare non-regulated area in Gyeonggi Province and was very popular, but now that it has become a regulated area, if demand dries up, only a drop in housing prices remains." When designated as a regulated area, the loan-to-value ratio (LTV) is limited to 50% for properties under 900 million KRW and 30% for the portion exceeding 900 million KRW. Additionally, the debt-to-income ratio (DTI) is set at 50%, and various taxes such as capital gains tax and comprehensive real estate tax are strengthened.

On the other hand, some residents predict that the apartment price increase in Dongducheon will continue for the time being. The representative of a real estate agency in Songnae-dong said, "This area has relatively affordable housing prices, and with the benefit of the Metropolitan Area Express Train (GTX), investment demand will continue to increase," adding, "As seen in the case of Deogyang-gu, Goyang-si, during the current housing price rise, prices inevitably rise even when designated as a regulated area." In fact, areas such as Deogyang-gu in Goyang-si and Yangju-si, which were non-regulated last year, continued to see price increases for several months even after being designated as regulated areas.

Experts predict that the designation as a regulated area is unlikely to lead to a drop in housing prices. Song Seung-hyun, CEO of Urban and Economy, explained, "While investment demand may be somewhat curtailed, temporarily reducing the rate of housing price increases, steady inflow of actual demand will continue, maintaining the upward trend," adding, "Especially in Dongducheon, where there are many mid- to low-priced apartments, the impact of loan regulations is expected to be limited."

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