Gwangju City Proposes Designation of Speculative Overheated Districts at Dong Level to Ministry of Land, Infrastructure and Transport

Gwangju City Hall

[Asia Economy Honam Reporting Headquarters Reporter Park Seon-gang] Gwangju Metropolitan City announced on the 22nd that it recently proposed to the Ministry of Land, Infrastructure and Transport regulations related to Speculative Overheating Zones under the Housing Act to stabilize prices following the rise in apartment housing prices in some areas.

A Speculative Overheating Zone is an area designated and announced by the Minister of Land, Infrastructure and Transport or the mayor/governor of a city/province, considering the conditions of the local housing market, where there is concern about speculative activities on housing, according to the Housing Act.

When designated as a Speculative Overheating Zone, regulations are strengthened, such as restrictions on mortgage loans and sanctions on pre-sale rights in redevelopment and reconstruction maintenance projects.

Currently, the Ministry of Land, Infrastructure and Transport designates Speculative Overheating Zones at the city or district level.

When Speculative Overheating Zones are designated at the district level, uniform regulations may cause harm to actual demanders despite differences in the degree of overheating in the housing market.

Accordingly, Gwangju City proposed to the Ministry of Land, Infrastructure and Transport to amend the Housing Act regulations to allow the designation scope of Speculative Overheating Zones, currently designated at the district level, to be set at the dong (neighborhood) level.

If Speculative Overheating Zones are designated at the dong level, pinpoint regulations can be applied to curb housing price increases occurring in specific areas, thereby enhancing the effectiveness of policies.

It is also expected that the reduction of broadly applied regulations will minimize damage to actual demanders.

In addition, to enable prompt responses to changes in the housing market, Gwangju City proposed to the Ministry of Land, Infrastructure and Transport to expand the authority to designate areas subject to the price ceiling system and adjustment target areas to mayors/governors of cities and provinces.

Kim Jong-ho, head of the Architecture and Housing Division of the city, said, “We will strive to stabilize the real estate market by proposing improvements to the Ministry of Land, Infrastructure and Transport’s system to prevent excessive housing price increases and block the inflow of external speculative forces.”