Apgujeong, Yeouido, Mokdong Designated as Land Transaction Permission Zones
"Frequent Disruption Complexes Will Be Postponed in Reconstruction Priority" Firm Response Pledged
"To normalize redevelopment and reconstruction, speculative demand will be severely punished. Even if the remaining term is not one year but one month, there will be no compromise."
Seoul Mayor Oh Se-hoon has declared war on real estate speculation. This comes as the rapid rise in housing prices in major reconstruction complexes continues, putting private-led supply measures at risk. Mayor Oh emphasized that he will strictly punish various disruptive acts such as price collusion by additionally designating areas like Apgujeong and Yeouido as land transaction permission zones. However, it remains uncertain whether housing price stabilization can be achieved by Mayor Oh's will alone.
According to Seoul City on the 2nd, from the 27th of last month, Apgujeong-dong in Gangnam-gu, Yeouido-dong in Yeongdeungpo-gu, Mok-dong in Yangcheon-gu, and Seongsu-dong in Seongdong-gu were designated as land transaction permission zones. These are all areas where housing prices overheated due to increased expectations for reconstruction and redevelopment around the time of Mayor Oh's inauguration.
Mayor Oh took this measure out of concern that the rapid rise in housing prices in reconstruction complexes could spread throughout Seoul. If the upward trend is not curbed, it could face backlash from public sentiment on real estate. In fact, recently, the ruling party has raised responsibility issues against Mayor Oh. Hong Ik-pyo, the Policy Committee Chair of the Democratic Party, stated, "The increase in areas such as Nowon-gu, Yangcheon-gu, Gangnam-gu, and Yeongdeungpo-gu mentioned by Mayor Oh has reached up to twice the amount," and argued, "The main cause is the declaration of deregulation while calling for speedy supply."
When designated as a land transaction permission zone, transactions of houses, commercial buildings, and land above a certain size require permission from the district mayor. Since 'sales with jeonse (long-term deposit lease)' are not allowed depending on the actual residence requirement, transaction volume naturally decreases. Mayor Oh expects this trend to lead to housing price stabilization.
Along with this, Mayor Oh also made strong remarks about strictly punishing disruptive acts in the real estate market. On the 29th, during a briefing on stabilizing the real estate market, Mayor Oh said, "While adjusting the speed of redevelopment and reconstruction, we will mobilize all possible administrative power to first eradicate disruptive acts in the real estate market."
Mayor Oh emphasized, "Abnormal cases such as false reports, merely raising asking prices, and price collusion continue in some reconstruction complexes," and added, "Speculative demand will be severely punished." Specifically, following the additional designation of land transaction permission zones, the plan is to strengthen monitoring of actual real estate transactions and punish speculative trades. He warned that complexes where disruptive acts frequently occur or where residents' representative meetings are involved will be pushed to lower priority in reconstruction and redevelopment.
Seoul Mayor Oh Se-hoon is making a statement on stabilizing the real estate market at the Seoul City Hall briefing room on the 29th. Photo by Kang Jin-hyung aymsdream@
Mayor Oh's policy stance, which advocated 'speedy housing supply' during his candidacy, appears to have shifted to 'first stabilize the market, then supply' in the face of rapid housing price increases.
However, it is uncertain whether Mayor Oh's tough measures will actually lead to housing price stabilization. During the four years of the Moon Jae-in administration, various measures such as tightening loan regulations, expanding regulated areas, and raising holding and capital gains taxes were implemented, but their effects did not last long. Shim Gyo-eon, a professor in the Department of Real Estate at Konkuk University, pointed out, "As long as expectations for redevelopment projects continue, there are limits to price stabilization through administrative power."
The limitations of the land transaction permission system have also been confirmed. In Daechi-dong, Gangnam-gu, which has been designated as a land transaction permission zone since June last year, a 151㎡ (exclusive area) unit of Raemian Daechi Palace was traded for 5.35 billion KRW on the 1st. This is the first time a transaction over 5 billion KRW has occurred in Daechi-dong. Jang Jae-hyun, head of Real Today, predicted, "Although transaction volumes will decrease in Apgujeong, Mok-dong, Yeouido, and other areas designated as land transaction permission zones, prices will likely rise further because development signals have become clear."
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