[After LTPZ Removal] Daechi-dong Homeowners Pull Listings... "The Atmosphere Has Completely Changed"

Sharp Decline in Transactions Even Before Deregulation
Only One Apartment Sale in February, Sellers Hold the Upper Hand

Panoramic view of Daechi-dong area, Gangnam-gu, Seoul. Photo by Lee Jungyoon

The real estate market in Daechi-dong, Gangnam-gu, Seoul, is abuzz with anticipation following its removal from the Land Transaction Permission Zone (LTPZ). As a representative school district, the area has consistently attracted those seeking to secure a home before school admissions. Now, with the regulatory restrictions that had previously constrained transactions lifted, expectations for price increases are rising. According to local real estate agencies, more homeowners have started withdrawing their listings since the announcement of the LTPZ removal.

As of February 13, the Seoul Metropolitan Government has lifted the LTPZ designation from 291 out of 305 apartment complexes across 14.4 square kilometers of the International Exchange Complex Zone, including Daechi-dong, Samseong-dong, Cheongdam-dong in Gangnam-gu, and Jamsil-dong in Songpa-gu. As a result, properties in Daechi-dong can now be traded without the need for approval from the district mayor. The obligation to use the land strictly for approved purposes, such as actual residence, has also been removed. Gap investment-purchasing a home with a tenant in place-is now possible as well.

Previously, acquiring a home larger than 6 square meters in an LTPZ required approval from the city, county, or district mayor. After purchase, the buyer was required to reside in the property for at least two years, and all household members had to be without any other homes or sell any existing homes within one year. Gap investment was effectively impossible under these rules.

Daechi-dong has long harbored high expectations for the removal of the LTPZ. Homeowners refrained from listing their properties, instead closely monitoring the situation and waiting for the official announcement. This anticipation was fueled by Seoul Mayor Oh Sehoon's remarks at the "Deregulation for Livelihood Recovery Grand Debate" on January 14, where he revealed that the city was considering lifting the LTPZ designation in the Gangnam area. It was the first time such a statement had been made in an official setting. Following the news of the removal, local real estate agencies were inundated with phone calls.

According to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system, only one apartment sale was recorded in Daechi-dong between February 1 and February 11. This is a sharp decline compared to 16 transactions in the previous month and 14 during the same period last month. The drop is even more pronounced when compared to 33 and 24 transactions in November and December of last year, respectively. As apartment sales have decreased, the proportion of monthly and yearly rental transactions in the area has risen. The share, which stood at 88.5% in November last year, surged to 97.1% between February 1 and 11.

An agent at Real Estate Agency A near Daechi-dong stated, "The atmosphere has completely changed since talk of lifting the Land Transaction Permission Zone began. We have received a series of calls from homeowners saying they will hold off on selling their apartments for the time being to see how things develop." Another agent at Real Estate Agency B commented, "Even if the housing market is sluggish elsewhere, Daechi-dong is a world apart. We are receiving inquiries from all over the country."

Even before the LTPZ removal, Daechi-dong's reputation as a top school district meant home prices had been steadily rising. Now, with additional positive factors, the outlook has improved further. On January 3, a 161-square-meter unit at Dongbu Centreville was sold for 5.85 billion won, setting a new record for the area.

Yoon Sumin, a real estate expert at NH NongHyup Bank, said, "Because Daechi-dong is a strong school district, there has always been steady demand, which has supported prices. With the latest deregulation, asking prices will likely rise immediately, but the key question is whether actual buyers will be willing to meet those prices."