10·15 Real Estate Measures

It has been a month since the government introduced the October 15 measures to curb the overheated housing prices in Seoul, but the market is moving in a direction different from what the government expected. Transaction volumes have plummeted, making the so-called "transaction cliff" a reality. However, in a paradoxical twist, housing prices in the Hangang Belt?the main target of the regulations?have seen their rate of increase expand even further. Hangang Belt: A 'Regulation-Free Zone' According to the weekly apartment price trend for the second week of November (as of November 10), released by the Korea Real Estate Board on November 13, the average sales price of apartments in Seoul rose by 0.17% compared to the previous week. The rate of increase was 0.02 percentage points lower than the previous week’s 0.19%. However, in the Hangang Belt, which was the focus of the new measures, the rate of increase actually expanded. In Yongsan District, the growth rate rose from 0.23% to 0.31%,

As the entire city of Seoul and major areas in Gyeonggi Province have been designated as "Type 3 regulated zones" under the October 15 measures, demand that has sought to bypass these restrictions is now flowing into high-priced officetels and multi-family housing. According to the real estate brokerage industry on the 27th, only three transactions of Tower Palace Phase 1 officetels in Gangnam-gu?where actual sales prices range from 3 billion to 8 billion won?were recorded last year, but several transactions have taken place since the announcement of the new measures. A real estate agency head near Dogok-dong Tower Palace said on the 25th, "Even an officetel listing that had not sold for about a year was sold immediately after the measures were announced." In Yeouido as well, transactions have started to pick up for high-priced officetels with two or three rooms. An agent at a real estate office near Daewoo Trump World commented, "Officetels used to see little trading because of low in

On October 25, President Lee Jaemyung approved the dismissal of Lee Sangkyung, the First Vice Minister of Land, Infrastructure and Transport, who had sparked controversy over alleged gap investment in apartments. The Ministry of Land, Infrastructure and Transport accepted his resignation less than a day after announcing to the media on the previous day (October 24) that Vice Minister Lee had expressed his intention to step down. President Lee appears to have acted swiftly, judging that the controversy could undermine the momentum of the government’s real estate stabilization policies, such as the ‘6·27 Measures,’ ‘9·7 Measures,’ and ‘10·15 Measures.’ President Lee is scheduled to depart for Kuala Lumpur, Malaysia, on October 26 to attend the ASEAN Summit. Vice Minister Lee had attempted to quell the controversy by issuing a video apology on October 23, but the allegations of gap investment and remarks made on a YouTube channel further fueled the backlash, ultimately leading to his resi

Lee Sangkyung, First Vice Minister of the Ministry of Land, Infrastructure and Transport, who became the center of controversy over so-called "gap investment" in apartments (a real estate investment strategy involving purchasing a home with a tenant's deposit), has expressed his intention to resign. The presidential office has decided to accept his resignation. On the 23rd, Vice Minister Lee released a video apology regarding the controversy surrounding him in an attempt to address the issue, but suspicions of gap investment and remarks he made on a YouTube channel further fueled the backlash, ultimately leading to his resignation. The Ministry of Land, Infrastructure and Transport announced Lee's intention to resign to the media on the 24th. In response, an official from the presidential office stated, "We have decided to accept his resignation." Since the President is scheduled to depart for Kuala Lumpur, Malaysia, on the 26th to attend the ASEAN Summit, the resignation is expected t

On the 23rd, the Monetary Policy Committee of the Bank of Korea decided to keep the base interest rate unchanged at 2.50% per annum. This decision came immediately after the announcement of the October 15 Real Estate Measures, which were introduced to cool down the surging housing prices in Seoul. Additionally, increased uncertainty surrounding the 350 billion dollar investment in the United States has heightened concerns over exchange rate volatility, prompting the central bank to prioritize financial stability. The Bank of Korea plans to maintain the current rate this month to assess the effectiveness of the October 15 measures, while also closely monitoring developments in Korea-China and Korea-US tariff negotiations around the Asia-Pacific Economic Cooperation (APEC) summit. The Monetary Policy Committee announced at the monetary policy direction meeting held at the Bank of Korea headquarters in Jung-gu, Seoul, that it would keep the base rate at 2.50% per annum. This marks the th

"With the upcoming local elections next year, the government is irresponsibly floating the idea of property holding tax reform?something it cannot immediately implement?merely to test public reaction, and is only causing confusion in the market." A real estate expert, speaking on condition of anonymity, strongly criticized the recent public discussion of property holding tax by the government, calling it nothing more than empty rhetoric from policymakers. He added, "They are talking about increasing the property holding tax while lowering transaction taxes, but if they really do that, it will only provide an exit strategy for multi-homeowners who ignored the government’s warnings and hoarded apartments." Many also compare the current situation to the backlash faced by the Moon Jae-in administration, which ignored demographic changes and the realities of the aging population and tampered with the comprehensive real estate tax. Less than a week after the government announced its October

In the five days immediately following the announcement of the October 15 measures, the volume of apartment transactions in Seoul dropped by half compared to before the announcement. This decline is attributed to the implementation of strong measures such as the designation of land transaction permit zones. However, the ongoing preference for owning a single, high-quality property is expected to persist, making it unlikely that the decrease in transactions will easily lead to a drop in prices. According to an analysis of the Ministry of Land, Infrastructure and Transport’s real transaction price system on October 22, the number of apartment transactions in Seoul between October 15 and 19 was recorded at 693. This represents a 44.8% decrease from the 1,257 transactions recorded between October 10 and 14, prior to the announcement. While the official reporting period for real estate transactions is still ongoing and figures may change, the overall trend indicates a sharp decline in tran

As the US Federal Reserve signals a halt to quantitative tightening (QT, or the reduction of market liquidity), the South Korean government has introduced stricter lending regulations and expanded regulated zones to prevent overheating in the real estate market. This is a preemptive measure to curb the property market before a full-fledged recovery in liquidity?the biggest variable affecting housing prices?takes hold. However, it remains uncertain whether this will be effective. There is growing speculation that idle funds in the market, unable to find suitable investment destinations, may flow en masse into income-generating real estate assets such as officetels, which remain outside the scope of regulation, especially amid an ongoing trend of interest rate cuts. Money Circulates Again... Powell Hints at "Halting Quantitative Tightening Within Months"According to the "Money and Liquidity" statistics recently released by the Bank of Korea on October 19, the broad money supply (M2 avera

"A client who said they would come to see the house in the afternoon canceled the appointment, saying they would 'wait and see for a while.'" (Real estate agent A near Mapo Raemian Prugio)"Clients rushed in saying they wanted to put down a deposit. Everyone is in a hurry, worried that the loan limits might be reduced." (Real estate agent B near Yangji Village, Bundang) On the first day that unprecedented real estate regulations were announced, designating all of Seoul and 12 areas in Gyeonggi Province as land transaction permit zones and regulated areas, a variety of reactions emerged in regions where housing prices had surged. In Mapo-gu, a key part of the Han River Belt in Seoul, the consensus was that "everyone who wanted to make a deal has already done so." In contrast, in Bundang, Seongnam City, Gyeonggi Province, where prices had started to catch up with those in Seoul, phone calls flooded in from people eager to sign contracts. Meanwhile, in Nowon, Dobong, and Gangbuk districts

The core of the housing market stabilization measures announced by the government on October 15 is to designate all areas of Seoul and certain parts of Gyeonggi Province as regulated zones, and to gradually reduce the loan limits for high-priced homes valued at 1.5 billion won or more, directly targeting speculative demand. Kim Gyucheol, Director of the Housing and Land Division at the Ministry of Land, Infrastructure and Transport, held a briefing at the Government Sejong Complex that day, stating, "If only parts of Seoul were designated, there would be a high risk of price increases spreading to areas not subject to regulation, making it inevitable to designate all 25 districts. If the upward trend in home prices continues to spread, we will consider additional designations." He also noted that the likelihood of a worsening rental shortage due to strengthened requirements for actual residence is low, but added that it is necessary to consider tax benefits such as deductions for month