Rising Calls for Additional Deregulation of Restricted Areas Amid Market Slump

Minister of Land, Infrastructure and Transport Won Hee-ryong is responding to questions from lawmakers at the Land, Infrastructure and Transport Committee plenary session held at the National Assembly on the 1st.

The nationwide downturn in the housing market is showing signs of intensifying, and with unsold units rapidly increasing in some areas, pressure is mounting to lift additional regulatory restrictions.

According to the Housing and Urban Guarantee Corporation (HUG) on the 2nd, the initial sales rate of private apartments nationwide in the second quarter (April to June) of this year was 87.7%. This marks a 10.6 percentage point drop compared to the second quarter of last year (98.3%). The initial sales rate refers to the ratio of contracted households to total households at the early sales stage of apartments (more than 3 months and up to 6 months after the issuance date of the sales guarantee). The situation is particularly severe in Daegu and Ulsan. The initial sales rates in these two cities were 18.0% and 35.4%, respectively, recording the lowest levels since related statistics began to be compiled.

Earlier, at the end of last month, the Ministry of Land, Infrastructure and Transport held a Housing Policy Deliberation Committee meeting and lifted the designation of speculative overheated zones in six cities, counties, and districts in Daegu, Daejeon, and Gyeongnam. The designation of adjusted target areas was also lifted for 11 cities, counties, and districts including all of Daegu except Suseong-gu, Gyeongsan-si in Gyeongbuk, and Yeosu-si in Jeonnam, as well as three areas in Gyeonggi Province: Ansan and Hwaseong. However, the situation in Daegu and other local areas remains stagnant. On the 29th of last month, HUG designated Jung, Dong, Nam, and Dalseo districts in Daegu and Gwangyang-si in Jeonnam as unsold unit management areas. All of these areas were removed from the adjusted target area designation as of the 5th of this month.

As the market outlook is poor enough that areas lifted from regulatory zones are still being designated as unsold unit management areas, the government has expressed a stance that it may consider further regulatory easing. On the previous day, Land Minister Won Hee-ryong stated during a report to the National Assembly Land, Infrastructure and Transport Committee, "The first round of regulatory zone lifting at the end of last month was insufficient," adding, "We will monitor changes in the situation and, if necessary, take additional measures to lift regulatory zones even before the end of the year." Once an area is removed from the adjusted target area designation, it is freed from various regulations such as limits on loan-to-value ratio (LTV) and debt-to-income ratio (DTI), heavy or additional taxation on capital gains tax, property tax, acquisition tax, and restrictions on resale of pre-sale rights.

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