[6.21 Real Estate Measures] Review of Partial Deregulation in Restricted Areas

Starting as early as next month, there is a growing possibility that some of the real estate regulation areas, including the 161 Speculative Overheated Zones and Adjustment Target Areas, will be lifted.

On the 21st, the government announced, "Considering the housing market situation and the overall impact on the market, we are reviewing the possibility of lifting restrictions on certain areas through the Housing Policy Deliberation Committee (Jujeongshim)." The decision on whether to lift regulation areas will be made by comprehensively reviewing factors such as housing price growth rates, trends in unsold homes, and subscription competition rates. The government plans to hold a Jujeongshim meeting at the end of this month and apply the decisions immediately after the revised notice is issued.

As of May, there are 112 Adjustment Target Areas and 49 Speculative Overheated Zones designated nationwide. Regulation areas are designated by considering both quantitative and qualitative criteria simultaneously, and if the criteria are no longer met, deregulation is possible.

In Adjustment Target Areas, loan regulations are imposed, such as limiting the Loan-to-Value ratio (LTV) to 50% for properties valued at 900 million KRW or less, and 30% for the portion exceeding 900 million KRW, with a Debt-to-Income ratio (DTI) of 50%. Additionally, real estate-related taxes such as capital gains tax and comprehensive real estate tax are strengthened, and subscription qualifications for housing are tightened. Adjustment Target Areas are selected among regions that meet quantitative criteria such as a housing price increase rate exceeding 1.3 times the inflation rate over the past three months, and are judged to be 'overheated' based on a comprehensive assessment of housing prices, subscription competition rates, and other factors.

Speculative Overheated Zones are subject to even stronger loan regulations, with an LTV of 40% for properties valued at 900 million KRW or less, and 20% for the portion exceeding 900 million KRW. These zones are designated in areas where the housing price increase rate is significantly (1.5 times) higher than the inflation rate, and where subscription competition is high or housing supply has sharply decreased, raising concerns about price increases.

Since the second half of last year, as the housing market has fallen into a transaction freeze and unsold homes have started to increase, demands for deregulation have surged, especially in local areas. Daegu, where oversupply has led to a surge in unsold homes, and Sejong, where housing prices have significantly dropped, are representative examples. During the local elections, demands for deregulation poured in from most regions nationwide, including Incheon, Jeonju, Pohang, and Gyeongju. The government's move to consider lifting regulation areas, after previously being concerned about localized housing price instability, is interpreted as due to the low likelihood of immediate side effects amid the ongoing high-interest rate trend.

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