More new developments could get price caps

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More new developments could get price caps

The government said Monday it could apply price caps on planned property developments in more locations.

On Nov. 8, the government capped prices in 27 neighborhoods in Seoul, mostly in the affluent Gangnam District south of the Han River, in order to cool off the real estate market.

Those measures, however, may drive up prices in other neighborhoods.

According to the Korea Appraisal Board, average apartment prices last week in Yangcheon District in western Seoul, which was unaffected by the Nov. 8 measures, rose 0.11 percent from the previous week. That compared to an average rise of 0.09 percent in Seoul.

“If there is overheating or signs of instability in the real estate market, we will implement required measures such as additional locations for the preconstruction price cap,” said Vice Finance Minister Kim Yong-beom during a meeting at the Export-Import Bank in Yeouido, western Seoul.

Kim’s comments came after similar warnings by Finance Minister Hong Nam-ki and Minister of Land, Infrastructure and Transport Kim Hyun-mee.

The Land Ministry has said it could consider expanding the cap to other locations including Yangcheon District.

On top of capping prices, the government will increase supply of residences to stabilize the market.

“The government plans to pursue supply-side responses such as providing 300,000 houses in the capital metropolitan region and expanding state-backed rental housing,” the vice finance minister said.

The government also vowed to crack down on speculation or illegal transactions in the real estate market.

The National Tax Service reported last week that it is reviewing 224 cases of suspected skirting of rules or laws, such as the case of a 3-year-old owning two high-end apartments without paying inheritance tax. Kim said the government will announce interim findings at the end of this month.

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