[Issue Interview] June 27 Measures Are the 'Financial Version of the Land Transaction Permit System'... 'This' Is Needed to Stabilize Housing Prices

A Drastic Short-term Measure... Long-term Supply Policy Needed
'Pulling Up the Ladder' Criticism Unavoidable... Need for Differentiated Investment Strategies

'Financial version of the land transaction permit system.'

This is how Ham Youngjin, Head of the Real Estate Research Lab at Woori Bank WM Center, evaluated the June 27 Household Debt Management Plan, the first real estate policy of the Lee Jaemyung administration. He analyzed that the June 27 measures were highly unusual and powerful. As these unprecedented measures have caused confusion in the market and at bank branches, we spoke with Ham, who is considered one of the experts most in touch with investors on the front lines, to hear his assessment of the new policy, his outlook, and investment strategies.

A Drastic Short-term Measure... Long-term Supply Policy Needed

Ham Youngjin, Head of Real Estate Research Lab at Woori Bank WM Center, is being interviewed by Asia Economy. Photo by Yoon Dongju

Ham pointed out two aspects that make this policy unprecedented compared to previous ones: the maximum loan limit of 600 million won, and the fact that it was implemented immediately without any grace period after the announcement.

He explained, "Capping the maximum mortgage loan limit at 600 million won, regardless of the borrower's repayment ability, is a regulation that has never been implemented before," adding, "Previously, there was always a grace period after the announcement of a new policy, but this time, immediate implementation demonstrates the administration's strong determination to stabilize the rapidly rising real estate market."

Given the strength of these regulations, he predicted that the sharp rise in housing prices, especially in the Gangnam and Hangang Belt areas of Seoul, would temporarily subside. Ham noted, "More than 50% of homes traded this year were priced at 900 million won or higher," and added, "Even along the Hangang River, the average price per unit is around 1.5 billion won. With the maximum mortgage limit now capped at 600 million won, buyers need at least 900 million to 1 billion won in cash, so transactions are likely to stagnate going forward."

He also observed, "The current trend in home purchases is 'trading up to better locations,'" explaining, "We are mainly seeing patterns of moving from the Hangang area to Gangnam, or from older buildings to new constructions. However, if buyers lack sufficient capital, this demand for trading up will inevitably be curbed."

However, while the policy has effectively cooled short-term overheating, he does not see it as a sustainable long-term solution. Ham analyzed, "The government introduced stronger-than-expected lending regulations as a 'drastic remedy' to calm the overheated market during a period of falling interest rates," but added, "In the long run, it is difficult to control market liquidity with regulations alone. Only supply-side measures can truly cool the overheated real estate market."

'Pulling Up the Ladder' Criticism Unavoidable... Need for Differentiated Investment Strategies

Ham Youngjin, Head of Real Estate Research Lab at Woori Bank WM Center, is being interviewed by Asia Economy. Photo by Yoon Dongju

Despite the policy's stated goal of restructuring the market around real demand by blocking 'gap investment' (buying with tenants in place), there has been criticism that it amounts to 'pulling up the ladder.' This is because even policy loans aimed at ordinary citizens and real demand, such as Didimdol and Bogeumjari loans, have seen their maximum limits reduced by about 100 million won.

Ham commented, "Limiting the mortgage cap to 600 million won across the board, regardless of repayment ability, and reducing the maximum loan term to 30 years for young people with little available capital?who could previously borrow for up to 50 years based on future income?are bound to draw complaints." However, he added, "Given the recent interest rate cuts and the short-term overheating of the real estate market, combined with FOMO (Fear Of Missing Out) demand, such measures seem inevitable to calm the market."

Ham further predicted that government policy would focus more on preventing a surge in real estate prices than on pushing prices down.

He stated, "In the short term, the overheated market may cool, but with limited supply in Seoul and the metropolitan area and ample latent demand, there is always the possibility of a quantum leap in housing prices if triggered. Therefore, supply-side measures are essential, and government policy will aim to prevent the sharp price increases in Gangnam from spreading to other areas."

Finally, Ham advised, "More than 70% of future housing supply will likely be allocated to special programs for newlyweds, first-time buyers, or families with multiple children. Young people should target these opportunities." For asset holders, he added, "Although the current economy is weak and there are vacancy risks, I recommend non-residential properties over residential ones, as the current administration may increase tax regulations on owners of multiple homes."