Seoul’s housing market heats up after land transaction permit eased

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Seoul’s housing market heats up after land transaction permit eased

Published: 18 Mar. 2025, 00:00

Audio report: written by reporters, read by AI

Apartment buildings seen from the Lotte World Tower in the Songpa district south of Seoul on March 9.[YONHAP]

Housing prices in Seoul’s affluent Gangnam district have surged dramatically, with some apartments increasing by 600 to 700 million won ($414,000 to $483,000) in mere weeks. This rapid escalation has ignited a ripple effect across the city, pushing prices up even in areas previously experiencing a downturn, such as Nowon, Dobong and Gangbuk (“Nodogang”), as well as Geumcheon, Gwanak and Guro (“Geumgwanggu”). Since mid-February, these districts have shown clear signs of an upward trend.

The primary catalyst for this renewed housing frenzy is widely attributed to the reduction of the Land Transaction Permit System (LTPS). Last month, the Seoul Metropolitan Government lifted LTPS restrictions in key zones, including Jamsil, Samseong, Daechi and Cheongdam (“Jamsamdaechung”). Within a month, apartment transactions in these areas surged by approximately 72 percent, with average sale prices rising by around 100 million won. Initially, city officials downplayed the impact, dismissing it as a temporary uptick in asking prices. However, as instability spread across the housing market, they began reconsidering reimposing LTPS regulations. Seoul Mayor Oh Se-hoon recently acknowledged, “If housing price increases become excessively abnormal, reinstating restrictions could be an option.”

Criticism has mounted over the decision to lift LTPS regulations when the market was already gaining momentum, fueled by expectations of interest rate cuts in both the United States and Korea. Implementing deregulation during the peak moving season has been likened to pouring gasoline on a fire. The Ministry of Land, Infrastructure and Transport had previously cautioned against the move, warning of its significant impact on real estate prices, but their concerns were not given due consideration. Moreover, it was revealed that there had been no prior consultation with financial authorities, raising questions about the decision-making process.

Real estate has long been a delicate issue in Korea, with successive administrations struggling to keep market volatility in check. In a period where interest rates — one of the most influential factors affecting housing prices — are expected to decline for the first time in over three years, lifting LTPS restrictions reflects a glaring lack of policy foresight. The absence of coordination with key agencies has even fueled speculation that Mayor Oh, a potential presidential contender, may have politically motivated reasons for catering to local sentiment. Given the clear repercussions, the Seoul Metropolitan Government should swiftly reinstate LTPS regulations to curb speculative activity and stabilize the market.

Beyond real estate concerns, the soaring housing prices have also raised alarms over household debt management. After a temporary dip in January, household loans increased by 4.3 trillion won last month. Korea now ranks second globally in household debt-to-GDP ratio, trailing only Canada. In response, the Financial Services Commission convened an emergency meeting to closely monitor mortgage loan applications in key districts, including Seocho, Gangnam and Songpa (“Gangnam 3 Districts”), as well as Mapo, Yongsan and Seongdong (“Mayongseong”). Banks must ensure that genuine home buyers can access necessary financing without fueling further speculation. Policymakers must act decisively to ensure housing prices remain stable, safeguarding economic stability in the process.

Translated using generative AI and edited by Korea JoongAng Daily staff.