Gap Investment Doubled in Seoul's Gangnam 3 Districts... "Inconsistent Land Lease System, Hasty Policy" [Unusual Housing Prices]

Gap Investment Surges in Gangnam 3 Districts
Following Lifting of Land Transaction Permit Zones

Since February this year, the so-called "gap investment," where buyers purchase homes with jeonse deposits in Seoul's Gangnam-gu, Seocho-gu, and Songpa-gu?collectively known as the Gangnam 3 districts?has noticeably increased. This is attributed to the lifting of the land transaction permit zones.

According to data submitted by the Ministry of Land, Infrastructure and Transport and disclosed by Assemblyman Cha Gyugeun of the Party for National Innovation on the 17th, the number of housing purchases in the Gangnam 3 districts funded through deposit succession and financial institution loans for rental purposes was recorded at 134 cases. This is more than double the 61 cases recorded in December last year. The purchase amount increased approximately 2.6 times during the same period, from 111.9 billion KRW to 294.3 billion KRW.

During this period, housing transactions with the same method and purpose in northern Seoul showed little change, increasing slightly from 12 to 14 cases. For all of Seoul, the number rose from 232 cases and 324.4 billion KRW in December last year to 429 cases and 699.1 billion KRW in February this year. This indicates that gap investment has become more active in the Gangnam area compared to other regions.

Image sketch related to Jamsil 5 Complex Apartment. Photo by Yongjun Cho jun21@

This is attributed to the lifting of the land transaction permit zones. Seoul Mayor Oh Se-hoon had previously announced at a forum in January this year that he was considering lifting the designation. About a month later, the zones were lifted in mid-February. The land transaction permit zone system requires approval from the local government when trading land in designated areas, and mandates a two-year residence requirement when purchasing housing. Gap investment is not allowed in designated areas.

As signs of significant fluctuations in housing prices emerged, the Seoul city government signaled that it might re-designate the zones. Assemblyman Cha criticized, saying, "Since Mayor Oh Se-hoon's lifting of the land transaction permit zones, suspected gap investment transactions have greatly increased, especially in the Gangnam 3 districts. The indecisive stance of potentially reverting to the original regulations just one month after deregulation proves that this is an unprepared and hasty policy."