Seoul: The government announced the designation of three new areas in Gyeonggi Province as speculative zones subject to stricter lending regulations, responding to a notable surge in home prices.

According to Yonhap News Agency, the Ministry of Land, Infrastructure and Transport named Dongtan Ward in Hwaseong, Giheung Ward in Yongin, and Guri as regulatory zones during a residential policy deliberation committee meeting held on Monday. The ministry's decision aims to inhibit speculative buying, safeguard legitimate homebuyers, and tackle the overheating housing market.

Recent rises in property prices in Dongtan and Giheung have been driven by expectations of further price increases, boosted by windfall bonuses received by Samsung Electronics Co. employees and enhancements in transportation infrastructure. These areas are strategically located near Samsung's headquarters in Suwon and significant production facilities.

In Guri, real estate prices have escalated due to its proximity to Seoul, especially the Gangnam business district. Dongtan experienced an 11.38 percent cumulative increase in home prices as of the fourth week of June, the highest in the nation. Guri and Giheung saw gains of 7.87 percent and 6.21 percent, respectively, during the same period.

The new designations will be effective from Wednesday and will persist until December 31, 2027, as stated by the ministry. The designation imposes a mortgage loan ceiling of 600 million won (approximately US$420,688) for homes priced at 1.5 billion won or less. For homes valued between 1.5 billion won and 2.5 billion won, the ceiling will be 400 million won, while it will be capped at 200 million won for homes exceeding 2.5 billion won in value.

Additionally, homebuyers will need to reside in the designated areas for a minimum of two years and will be barred from purchasing homes using jeonse, or lump-sum deposits.