Gov’t tries to cut home prices in more of Seoul

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Gov’t tries to cut home prices in more of Seoul

The government is poised to impose another round of measures to cool down stubbornly high housing prices, especially in Seoul, as apartment prices in the capital region continue to climb.

Finance Minister Kim Dong-yeon said on Thursday that the ministry will add more districts in Seoul to its list of speculative zones, with more details to be announced next week. Buyers in speculative areas are required to pay higher transfer income taxes.

“[The Finance Ministry] will soon designate more regions as speculation-prone zones to contain the forces of speculative investment,” the minister said during a meeting with Choi Jong-ku, head of the Financial Services Commission and Kim Hyun-mee, the minister of land, infrastructure and transport.

Since 11 overheated districts, including Gangnam, Mapo and Yongsan Districts, are already labeled as speculative zones, analysts believe that some of the remaining 14 districts could also be designated as speculative zones.

The government has three different designations aimed at curbing surging housing prices. Of the three, the speculative zone designation is considered the toughest.

All Seoul districts and the administrative city of Sejong are currently subject to the other two regulations, which limit transfers of ownership and amount of mortgage loans homebuyers can take out.

Both the loan-to-value and debt-to-income ratios were lowered to 40 percent in those areas from the previous 60 percent in Seoul and 50 percent in Sejong. The latest move came after recent data showed that Seoul’s apartment prices kept rising despite existing regulations.

The average price of apartments in Seoul hit a seven-month high, growing 0.37 percent over the previous week, according to the Korea Appraisal Board, a government-run real estate information provider. Observers believe that the government’s move to limit ownership of multiple homes bolstered demand for apartments in the affluent Gangnam region of southern Seoul.

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