Property restrictions lifted in most Seoul districts as prices fall

Economy

Published: 03 Jan. 2023, 18:29

Property restrictions lifted in most Seoul districts as prices fall

President Yoon Suk Yeol gets briefed by Minister of Land, Infrastructure and Transport as well as Minister of Environment on this year's government plan at the Blue House's guest house on Tuesday. [YONHAP]

Real estate regulations put into place by the last administration have been lifted, except in a few districts in Seoul.

In three districts below the Han River — Gangnam, Seocho and Songpa — and in Yongsan District, some restrictions will still be in place. This includes a loan-to-income ratio of 40 percent and a loan-to-value ratio of 50 percent.

When Yoon Suk Yeol began his term, all 25 districts in Seoul were included in the list.

A number of other restrictions were also lifted Tuesday. These include maximum prices that can be charged for new apartments in Seoul and neighboring cities in Gyeonggi, including Gwacheon and Haham. Restrictions on owners of newly built apartments in Seoul and neighboring Gyeonggi selling for five years have been relaxed as well.

The changes were announced during a briefing made by the Ministry of Land, Infrastructure and Transport to President Yoon Suk Yeol on Tuesday. The administration has been working to stabilize the real estate market, where prices have been plummeting as rates rise.

About 150 or so people from the government, including Prime Minister Han Duck-soo and lawmakers and private sector representatives met with Land Minister Won Hee-ryong at the Blue House state guest house Yeongbingwan.

The local real estate market has become the big threat to the economy, weakening the financial market and Korean construction companies and straining consumer spending.

“While respecting the basic market principles, the government should manage to some extent to make the rise and fall of housing prices predictable,” Yoon said on Tuesday. “We have tried to control the speed of relaxing regulation because if too fast, it would become unpredictable."

“Due to the recent increases in interest rates, the possibility of a hard landing has increased, and for that reason we have decided to speed up on our bold lifting of regulations on the demand side.”

Since Yoon took office, the government has been aggressively lowering the property tax rate and easing loan regulations.

On Dec. 23, the National Assembly approved a bill that raises the assessed value level for levying the comprehensive real estate tax on a single apartment from 1.1 billion won ($865,000) to 1.2 billion won.

It passed with strong support, with Democratic Party legislator approving a bill rolling back measures put into place by a DP president.

In Seoul, apartment prices fell 4 percent between September and November, according to the Korea Real Estate Board. During this period, prices in Nowon District and Dobong District in the northern Seoul dropped more than 6 percent, while in Gangbuk, Seongbuk, Eunpyeong districts, the decline was about 5 percent.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]