Weather Forecast for Seoul and Gyeonggi Regulated Areas: 'Cloudy for the Time Being'

House Prices Still High, Government Takes Cautious Approach

View of Apgujeong, Samseong-dong, and Jamsil areas from Namsan, Seoul.
[Image source=Yonhap News]

[Asia Economy Reporter Cha Wanyong] The government has lifted the designation of Sejong City and Incheon Metropolitan City as speculative overheated districts and has completely removed regulatory zones (speculative overheated districts and adjusted target areas) in the provinces (excluding Sejong). Now, market attention is focused on the schedule for lifting regulations in Seoul and the Gyeonggi area. This includes 25 autonomous districts in Seoul and 14 areas in Gyeonggi such as Gwacheon, Bundang in Seongnam, Gwangmyeong, Hanam, and Suwon.

For now, the government’s stance is that a more cautious approach is necessary for Seoul and Gyeonggi areas, considering that housing prices remain high and the period of price decline has not been long. In other words, there are no plans for the time being.

According to the Ministry of Land, Infrastructure and Transport on the 22nd, there is no confirmed schedule for holding the Housing Policy Deliberation Committee (Jujeongshim), which decides on the designation or lifting of regulatory areas, within this year. At the first Jujeongshim held in June, private committee members expressed the need to respond timely according to market conditions such as interest rate trends, and it was agreed to hold meetings irregularly. The second Jujeongshim, originally scheduled for December, was brought forward by about three months and held on the 21st of this month. The current regulation stipulates one meeting every six months.

However, the Ministry of Land, Infrastructure and Transport has shown a stance of comprehensively considering market conditions regarding the possibility of additional Jujeongshim meetings within the year, leaving a slight possibility open. Simply put, if the real estate market shifts to a sharp decline, the Jujeongshim may be convened.

But this applies only to some areas in Seoul and the Gyeonggi region. The ‘Gangnam 3 districts (Gangnam, Seocho, Songpa)’ and ‘Mayongseong (Mapo, Yongsan, Seongdong)’, which are designated as speculative areas, as well as Yangcheon, Yeongdeungpo, Nowon, Gangdong, Gangseo districts with many reconstruction complexes, and central districts such as Jongno, Dongdaemun, and Jung in Seoul, totaling 15 places, are expected to be difficult to adjust for the time being. This is because housing prices have surged rapidly in recent years, and lifting the speculative area designation could attract speculative demand and cause market confusion.

Moreover, lifting the speculative area designation falls under the jurisdiction of the Ministry of Economy and Finance. Since it formulates and implements policies for the overall economy, the interests involved are complexly intertwined. The review process is inevitably more stringent than that of the Ministry of Land, Infrastructure and Transport, which only manages real estate policies. Sejong, the only area lifted from the speculative district designation this time, was decided after the Ministry of Economy and Finance held a separate Real Estate Price Stabilization Deliberation Committee and then conveyed its opinion to the Ministry of Land, Infrastructure and Transport.

Meanwhile, looking at precedents, lifting the speculative district designation has only been done when a major adjustment in the real estate market occurred, and it took a considerable amount of time. The speculative district regulation centered on Gangnam-gu in 2003 was lifted only in 2011, when the real estate crash peaked due to the financial crisis. Lee Jaemyeon, head of the Property Taxation Division at the Ministry of Economy and Finance, said, "It is difficult to talk concretely and definitively about lifting the speculative district designation in the current situation," adding, "We will first monitor the regulatory areas lifted this time and closely observe the market situation moving forward."

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