[LTPZ Lifted] Jamsil Prices Already Up 200 Million Won... Listings Disappear in Daechi

Expectations for Price Increases Surge
Listings Withdrawn, Transactions Plummet
Seoul City May Reinstate Restrictions if Market Overheats

In Daechi-dong, Gangnam-gu, Seoul, listings have disappeared ahead of the new school term. This is typically when demand for moving into school districts surges, but after the Seoul Metropolitan Government lifted the Land Transaction Permission Zone (LTPZ) designation, homeowners began withdrawing their properties from the market. They believe it is more advantageous to sell after prices rise. When listings decrease, home prices tend to increase. Already, the asking prices for prime apartments in Jamsil have risen by 100 million to 200 million won for similar reasons. With expectations for price increases growing, the city government stated that it could re-designate the area if the market overheats.

◆ Daechi-dong homeowners: "We are not selling" = On February 12, real estate agencies in Daechi-dong reported that the lifting of the LTPZ was "an expected step." Starting February 13, the city lifted the LTPZ designation for 291 out of 305 apartment complexes across 14.4 square kilometers in the International Exchange Complex area, including Daechi-dong, Samseong-dong, Cheongdam-dong in Gangnam-gu, and Jamsil-dong in Songpa-gu. As a result, in Daechi-dong, residential, commercial, and land transactions can now proceed without district office approval. The obligation to use the property for the approved purpose, such as actual residence, has also disappeared. Gap investment-buying a house with a jeonse (long-term deposit lease) tenant in place-has become possible again.

Until the previous day, anyone seeking to purchase a home with a land area exceeding 6 square meters needed approval from the city, county, or district office head. After a purchase, the buyer was required to reside in the property for at least two years. All members of the buyer’s household had to be without a home, or sell all existing homes within a year, to qualify for a purchase. Gap investment was virtually impossible.

Since January 14, the phones at Daechi-dong real estate agencies have been ringing nonstop. That was the day when Seoul Mayor Oh Se-hoon stated at the "Regulation Easing and Livelihood Recovery Grand Debate" that he was considering lifting the LTPZ in Gangnam. This was the first time such a statement had been made publicly. After this, homeowners began withdrawing their listings, saying, "We are not selling."

As listings decreased, transactions also dropped. According to the Ministry of Land, Infrastructure and Transport’s actual transaction price disclosure system, only one apartment sale was recorded in Daechi-dong from February 1 to 11. This is a sharp decline compared to 16 transactions in the previous month and 14 in the same period a month earlier. In November and December last year, there were 33 and 24 transactions, respectively, highlighting the significant decrease.

A real estate agency near Daechi-dong reported, "The atmosphere completely changed after talk of lifting the Land Transaction Permission Zone began. We have received many calls from owners who have decided not to sell their apartments and to wait and see how things develop." Another agency added, "Even if the housing market is sluggish elsewhere, Daechi-dong is a different world. We are getting calls from all over the country."

Yoon Sumin, a real estate specialist at NH Nonghyup Bank, said, "Daechi-dong has always maintained strong demand because of its school district, which helps support prices. With this regulatory easing, asking prices will immediately rise, but the key issue is whether actual buyers can accept these higher prices."

◆ Jamsil-dong: "Asking prices up by 100 million to 200 million won" = In Songpa-gu, the asking prices for prime apartments in Jamsil have surged. For example, a mid-floor, 59-square-meter unit in the Els apartment complex in Jamsil-dong is currently listed for between 2.38 billion and 2.5 billion won. Before the Lunar New Year holiday, at the end of last month, similar units were listed for 2.3 billion to 2.35 billion won, marking an increase of over 100 million won. The main reason for the rise in asking prices is cited as the lifting of the LTPZ. An agent at a real estate office in Jamsil-dong stated, "With the LTPZ lifted, transactions have become easier, so we expect sales prices to rise as well."

For the Jamsil LECENS apartment complex, the asking price for an 84-square-meter high-floor unit is now between 2.95 billion and 3 billion won. At the end of last month, similar units were listed for between 2.75 billion and up to 2.9 billion won. At the Jamsil Trizium complex, a 59-square-meter, 16th-floor unit sold for 2.255 billion won on January 15, setting a new record. The previous record was 2.21 billion won in October last year, meaning the price jumped by 45 million won in four months.

Expectations surrounding the lifting of the LTPZ have driven up asking prices. A real estate agent in Jamsil-dong commented, "For the Els, Lecens, and Trizium apartments, well-maintained units of 84 square meters could reach the 3 billion won range."

The city government stated that it would comprehensively assess future price trends and consider re-designating the area if the market overheats. Cho Namjun, head of the city’s Urban Space Headquarters, said, "We plan to make a comprehensive judgment based on real estate price growth rates and transaction trends. Our principle is that real estate transactions must stabilize and move downward to a significant extent." On February 12, the Seoul Metropolitan Government announced the lifting of the LTPZ in the Jamsil, Samseong, Daechi, and Cheongdam areas near the International Exchange Complex. Out of 305 apartment complexes, 291 have been released from the designation.