Non-Seoul Residents Buying Homes in Seoul... Transactions Plummet as Gap Investment Blocked [Real Estate AtoZ]

After the implementation of the 10·15 Measures, the number of non-Seoul residents purchasing homes in Seoul has plummeted. This is attributed to the designation of the entire city of Seoul as a Land Transaction Permission Zone (LTPZ), which has created barriers for non-Seoul residents attempting to invest in Seoul real estate through gap investment (buying a property with a tenant and a deposit). Many had sought to secure a "smart single property" in Seoul, but these efforts have now been thwarted.

According to an analysis of court registry data released on the 6th, the number of non-Seoul residents who purchased collective buildings (such as officetels, apartments, row houses, and multiplex houses) in Seoul last month stood at 3,810. This represents a 21.6% decrease compared to the previous month’s figure of 4,862.

This is seen as a result of the designation of the entire city of Seoul and key areas in Gyeonggi Province as LTPZs. With the expansion of LTPZs, a residency requirement was imposed on homebuyers, effectively blocking gap investments. Those who had planned to purchase a home in Seoul, rent it out, and live elsewhere are now unable to do so. Under the previous 6·27 Measures, only the three Gangnam districts and Yongsan District were designated as LTPZs. The recent expansion, coupled with concerns that the scope of regulation could widen to other areas, had previously fueled a surge in gap investment in Seoul by non-residents.

The sharp reduction in mortgage loan limits based on property prices has also dampened investment sentiment. For homes priced at 1.5 billion won or less, the loan limit remains at 600 million won under the previous 6·27 Measures. However, for properties priced between 1.5 billion and 2.5 billion won, the limit has been reduced to 400 million won, and for those over 2.5 billion won, the limit is now 200 million won.

Transactions by non-Seoul residents have dropped significantly in prime locations. In Yeongdeungpo District, which includes Yeouido, the figure fell by 53.1%. Songpa District, Seocho District, and Mapo District, which is part of the Hangang Belt, also saw decreases of 45.1%, 42.7%, and 34.4%, respectively. In the most prominent prime locations, Gangnam District and Yongsan District, the number of non-Seoul resident homebuyers shrank by 22.4% and 22.6%, respectively.

However, as non-Seoul resident investment in prime locations has dropped sharply, their share of transactions in less expensive areas has increased. The largest increase was seen in Dongdaemun District (348 people), which saw a 63.4% rise from September to October. The housing price index in Dongdaemun District stands at 101.49, lower than the Seoul average of 103.41, indicating it is a relatively affordable area within the city. Similarly, Dobong District and Gwanak District, which also have relatively low housing prices, saw increases of 22% and 9.9%, respectively.

Yoon Sumin, Real Estate Specialist at NH Nonghyup Bank, explained, "The 10·15 Measures were implemented to block gap investment, and as a result, only genuine demand remains, leading to a decline in investment by non-Seoul residents."