Seoul: The government has designated all 21 remaining districts in Seoul as speculative zones, introducing stricter lending rules to address rapidly escalating housing prices in the capital region. This action, which may require future tax revisions, was announced during a ministerial meeting at the government complex in Seoul, attended by Finance Minister Koo Yun-cheol, Land Minister Kim Yun-duk, and other key financial officials.
According to Yonhap News Agency, the new speculative zone designations expand upon existing zones in the districts of Gangnam, Seocho, Songpa, and Yongsan, effectively placing all 25 districts in Seoul under speculative status. Additionally, twelve cities in Gyeonggi Province, including Gwacheon, Yongin, Uiwang, and Hanam, have been newly designated as regulatory zones. These new designations will take effect on Thursday.
Apartment prices in Seoul have shown a sharp increase in recent months, particularly in areas near the Han River. This surge has fueled speculative demand, presenting a significant challenge for the new government under President Lee Jae Myung. The land minister emphasized the urgency, stating, "The golden time for stabilizing the housing market must not be missed," and highlighted the government's commitment to prioritizing housing market stabilization.
Financial regulations on mortgage loans will be tightened under the new measures. The government plans to implement a mortgage loan ceiling of 600 million won (approximately US$420,688) for homes priced at 1.5 billion won or less, 400 million won for homes valued between 1.5 billion won and 2.5 billion won, and 200 million won for homes worth more than 2.5 billion won. Furthermore, there is potential for raising real estate-related taxes to redirect capital toward more productive sectors, although specific tax rule revisions will be evaluated based on their market impact and equity.
Despite President Lee's campaign assurance of avoiding tax hikes as a primary tool for housing market stabilization, the government has clarified that taxation could be utilized as a "last resort." Finance Minister Koo reaffirmed this stance during a parliamentary government audit, emphasizing that taxation has not been ruled out entirely.
The government also plans to intensify its crackdown on illegal housing transactions. A real estate crime oversight body will be established under the prime minister's office to conduct investigations through an affiliated unit. Additionally, the land ministry will target false transaction price reporting, while the National Tax Service will monitor transactions involving luxury homes valued over 3 billion won. The National Police Agency will launch a special crackdown on real estate crimes, focusing on price manipulation, illegal subscriptions, and corruption related to reconstruction and redevelopment projects.