Experts Say "Short-Term Price Surge Driven by Upgrading Demand... Helps Stabilize Jeonse Market" [LTPZ Lifted]

Experts Predict Short-Term Surge in Transactions and Prices in Jamsil, Samseong, Daechi, and Cheongdam
Strong Demand Expected for Leading Complexes Like Jamsil Elite
Gap Investments Now Possible, Likely to Stabilize Jeonse Prices

The Seoul Metropolitan Government has announced its plan to lift the land transaction permit zone (LTPZ) designation, which had been extensively applied to the areas of Jamsil, Samseong, Daechi, and Cheongdam, while maintaining the designation only for select redevelopment complexes. As a result, there are growing expectations that real estate transactions will increase and housing prices will rise in the areas where the designation is lifted. Many observers believe a short-term price surge is inevitable as pent-up demand for upgrading to higher-value properties converges on these neighborhoods. Some have also suggested that the ability to engage in gap investment could bring a measure of stability to the jeonse and monthly rental markets.

Experts Agree: "Transaction Volume Will Increase and Prices Will Rise"

On February 13, most experts predicted that the lifting of the LTPZ would lead to increased transaction volumes and higher prices in the affected areas. However, they expressed differing views regarding the extent of the price increases and how long the upward trend might persist.

Kim Hyosun, real estate specialist at NH Nonghyup Bank, noted that the areas of Jamsil-dong, Samseong-dong, Daechi-dong, and Cheongdam-dong, which have now been removed from the LTPZ, have limited supply of new apartment complexes, meaning the impact will be substantial. She observed, "These areas are highly preferred by buyers due to their school districts and business facilities, and supply is limited. Therefore, asking prices could rise sharply in the short term, and transactions may become overheated."

Ham Youngjin, head of the Real Estate Research Lab at Woori Bank, predicted that leading apartment complexes in the lifted areas would see strong price trends. He said, "Asking prices were already strengthening on expectations of the LTPZ being lifted. Given the strong preference for high-quality single units and significant demand for upgrading to better locations, local landmarks such as L, Ri, and Te in Jamsil-dong and Raemian La Classie in Samseong-dong are likely to become seller’s markets, with price strength continuing through the spring moving season."

Yoon Sumin, real estate specialist at NH Nonghyup Bank, forecast that polarization would intensify, with prices in the Gangnam area rising much more rapidly than elsewhere. He analyzed, "There is a possibility that funds from other districts such as Gangdong-gu will flow into Gangnam, and as this trend spreads to lower-tier areas, it could further widen the gap between Gangnam and non-Gangnam districts."

"Investment Demand Will Have Limited Impact... Jeonse Price Stabilization Also Expected"

Some experts believe the long-term impact of lifting the LTPZ will be limited. Kwon Youngsun, team leader at Shinhan Bank’s Real Estate Investment Advisory Center, said, "Jamsil, Samseong, Daechi, and Cheongdam are areas with consistently high demand, so the current price uptrend is likely to continue." However, he added, "Because tax regulations on multi-homeowners remain in place, investment demand will be limited."

Yang Jiyeong, head of Asset Management Consulting at Shinhan Investment & Securities, also commented, "For some buyers preparing for gap investments, there may be increased demand for relatively new apartments in Jamsil." She added, "However, the impact of the LTPZ lifting could be diluted by the upcoming implementation of the third phase of the stress DSR (Debt Service Ratio) and ongoing domestic and global economic uncertainties."

Additionally, as gap investments become possible again-particularly in popular areas such as Daechi-dong-some expect that jeonse prices in these neighborhoods may stabilize to some extent. Song Seunghyun, CEO of Urban and Economy, stated, "As investment demand flows in, transaction volumes will increase, and the rise in jeonse prices may be somewhat moderated."

Lifted Except for Redevelopment Areas in Jamsil, Samseong, Daechi, and Cheongdam

Meanwhile, on February 13, the city announced that it would lift the LTPZ designation for 291 out of 305 apartment complexes located in four neighborhoods near the International Exchange Complex (Jamsil-dong in Songpa-gu, and Samseong-dong, Daechi-dong, and Cheongdam-dong in Gangnam-gu). Among 123 sites designated for fast-track integrated redevelopment and reconstruction, the LTPZ was also lifted for six locations that had completed both the designation of the maintenance area and the establishment of a residents’ association.

The LTPZ designation remains in place for 14 complexes: Gaepo Woosung 1 and 2, Seonkyung, Mido, Ssangyong 1 and 2, Woosung 1, and Eunma Apartments in Daechi-dong, Jinheung Apartments in Samseong-dong, Hyundai 1 in Cheongdam-dong, and Jamsil Jugong 5, Woosung 1, 2, 3, and 4, and Asia Athletes' Village in Songpa-gu. Major redevelopment and reconstruction zones in Apgujeong, Yeouido, Mok-dong, and Seongsu, as well as 14 fast-track planning sites in Gangnam's three districts and Yongsan-gu, and three public redevelopment sites, will also remain as LTPZs. The city will consider lifting the designation for these areas only after a comprehensive review, once the risk of speculation is deemed low following approval of the management and disposal plan. For fast-track integrated redevelopment and reconstruction projects, the decision to lift the LTPZ will be made after the residents’ association has been established.