Daejeon Speculative Overheating Zone Lifted... Sejong 'Maintained'

[Asia Economy (Daejeon) Reporter Jeong Il-woong] Daejeon has unlocked the shackles that had constrained its real estate market. In contrast, Sejong, neighboring Daejeon, has not lifted these restrictions, resulting in a divergence in outcomes.

According to Daejeon City on the 30th, the Ministry of Land, Infrastructure and Transport held a Residential Policy Deliberation Committee meeting and decided to partially lift regulatory zones, mainly in provincial areas.

In Daejeon, under the June 19, 2020 real estate policy, the entire area was designated as a regulated area, with Dong-gu, Jung-gu, Seo-gu, and Yuseong-gu designated as speculative overheating zones.

However, on this day, Daejeon was included in the list of areas where the speculative overheating zone was lifted (while maintaining the regulated area status), allowing the shackles on real estate transactions to be released. This comes two years after being designated as a regulated area.

The city expects the deregulation to revitalize the local real estate market. There is optimism that the transaction freeze caused by the designation as a speculative overheating zone may improve going forward.

Going a step further, the city plans to continuously monitor the local housing market trends and submit a proposal to the Ministry of Land, Infrastructure and Transport to request lifting the regulated area designation when the conditions for lifting the regulated area are met.

Jung Hae-gyo, Director of the Urban Housing Bureau of the city, said, “We expect the Daejeon housing market to be revitalized again with the lifting of the speculative overheating zone,” adding, “In addition to deregulation, the city will actively utilize fast-track approval strategies such as integrated reviews to ensure that housing supply can proceed swiftly, thereby promoting stabilization of the real estate market.”

Unlike Daejeon, Sejong (designated as a speculative overheating zone) was not included in the deregulated areas on this day. Although apartment prices in Sejong have been steadily declining since June last year, it is analyzed that the high competition rate in subscription applications indicates that potential demand remains.

However, the Ministry of Land, Infrastructure and Transport left room for additional consideration of lifting regulatory zones in areas where housing prices show a downward stabilization trend by monitoring the housing market situation by region in the second half of this year.

Meanwhile, the loan-to-value ratio (LTV) for housing mortgage loans in speculative overheating zones is applied at 40% for properties under 900 million KRW and 20% for those exceeding 900 million KRW, resulting in relatively high loan thresholds. Restrictions on redevelopment and other maintenance projects also act as limitations to revitalizing the housing market.