Government Decides to Maintain 'Adjusted Target Areas' Designation for Regions with Falling Housing Prices Including Daegu

Ministry of Land Holds Deliberation Committee Meeting to Review Regulatory Area Adjustment Plan
Members Say "Real Estate Market Is Stabilizing"
However, Potential Housing Price Instability if Regulations Are Eased
Decision on Lifting Regulations to Be Made After Monitoring in First Half of Next Year

[Image source=Yonhap News]

Recently, local cities such as Daegu, where housing prices have entered a downward trend, requested the government to lift the designation of adjustment target areas, expressing concerns about a rapid downturn in the housing market. However, the government has made a final decision not to lift the designation.

On the 30th, the Ministry of Land, Infrastructure and Transport held the 4th Residential Policy Deliberation Committee (Jujeongsim) meeting to review the 'Adjustment plan for Speculative Overheated Districts and Adjustment Target Areas' and announced that it would continue to monitor the market situation in the first half of next year without adding or lifting any regulated areas.

On the same day, the Ministry held a private committee members' meeting chaired by First Vice Minister Yoon Seong-won to conduct in-depth discussions on recent housing market trends and prospects.

The private committee members agreed that due to the government's multifaceted efforts to expand housing supply, such as pre-sale applications, the Bank of Korea's base rate hikes, and the financial authorities' strengthened management of household debt, the recent housing price growth rate has slowed, and the market is gradually stabilizing.

They also anticipated that the government will actively expand housing supply next year by offering 460,000 units nationwide, and considering that major overseas countries such as the United States and the United Kingdom are implementing liquidity withdrawal measures following the normalization of monetary policies, downward pressure on housing prices is expected to continue.

However, most committee members judged that it is still inappropriate to ease regulations given the low interest rate levels and abundant liquidity in the market. If regulatory intensity is reduced, localized market instability could reoccur.

The members also took into account that speculative demand still remains, as evidenced by concentrated buying activity in low-priced houses with official prices below 100 million KRW in provincial areas.

Accordingly, the Jujeongsim decided not to lift regulations even in some areas with low housing price growth rates among the current Speculative Overheated Districts and Adjustment Target Areas.

They explained that in most areas under consideration for lifting, housing price increases are continuing or it has not been long since prices turned downward, and the number of unsold houses remains low, making it premature to conclude that the market has stabilized.

Previously, Daegu, Ulsan, and Dongducheon in Gyeonggi Province had requested the government to lift the designation of adjustment target areas. On the 28th, Daegu Mayor Kwon Young-jin met with Minister of Land, Infrastructure and Transport Noh Hyung-wook and submitted a proposal to lift the designation of Daegu as an adjustment target area.

Mayor Kwon emphasized at the time, "Recently, housing prices in Daegu have shifted to a downward trend, and the housing market is depressed with about 2,000 unsold units persisting for a long time, so lifting the designation of adjustment target areas is necessary."

The committee members also discussed the possibility of additionally designating some non-regulated areas that had recently experienced high housing price growth as regulated areas, but since the rate of increase has slowed since last month, they decided to monitor the market trend in the first half of next year before making a decision on additional designations.

First Vice Minister Yoon said, "Recent market indicators show signs of housing market stabilization," and added, "The government will do its utmost to accelerate housing supply and manage liquidity to achieve a firm downward stabilization of the housing market as soon as possible, beyond just a slowdown in the upward trend."