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Third try a charm? New gov't real estate regulations to roll out Wednesday.

Published: 14 Oct. 2025, 17:15 Updated: 18 Oct. 2025, 13:49

Apartments across Seoul are seen on Oct. 14. [YONHAP]

The government will announce a new set of real estate regulations on Wednesday — its third policy rollout in just four months under the Lee Jae Myung administration. It is expected to include expanded regulated zones, broader land transaction permit areas and tougher lending restrictions.

Despite previous measures introduced on June 27 and Sept. 7, apartment prices in Seoul and the greater capital region continue to show signs of overheating, prompting authorities to consider more aggressive intervention.

The new policy will be unveiled following an economic ministers’ meeting on Wednesday. The government is reportedly leaning toward expanding the scope of designated regulated zones — including “adjustment target areas” and “overheated speculation zones” — to cover all of Seoul and parts of Gyeonggi.

Initial expectations had focused on select districts such as Mapo, Seongdong and Gwangjin — the so-called “Han River Belt” due to its location — as well as parts of Bundang and Gwacheon in Gyeonggi, but the new regulations may apply to a wider area, according to sources.

At a parliamentary audit on Monday, Minister of Land, Infrastructure and Transport Kim Yun-duk said expanding regulated zones is “inevitable” when asked whether such measures would be included in the forthcoming real estate policy.

Once designated as regulated, loan-to-value (LTV) ratios for mortgages will be reduced from 70 to 40 percent, and debt-to-income ratios will also be capped at 40 percent. Property acquisition taxes for owners purchasing an additional home will increase, while restrictions on housing subscriptions and resale will be tightened.

Currently, the only regulated areas are southern Seoul’s three districts — Seocho, Gangnam and Songpa — and Yongsan District in central Seoul. The criteria for designating a regulated zone include a local home price increase exceeding 1.3 to 1.5 times the national consumer price index over the past three months — a threshold that much of Seoul has now surpassed.

Minister of Land, Infrastructure and Transport Kim Yun-duk answers lawmakers’ questions during a parliamentary audit by the Land, Infrastructure and Transport Committee at the National Assembly on Oct. 13. [YONHAP]

“Rather than targeting select parts of Seoul, the plan is to include all of Seoul and parts of Gyeonggi to prevent speculative demand from shifting to nearby areas,” a key ruling party official said.

In addition to regulated zones, the government is also considering an expansive designation of land transaction permit zones across key areas of Seoul and Gyeonggi. These zones place even stronger restrictions on real estate activity, such as banning gap investment — purchasing homes with a tenant in place — and requiring two years of actual residency by buyers.

The Land Ministry currently has the authority to designate land transaction permit zones in areas where speculative risk spans two or more municipalities. Last month, it designated all of Seoul, Incheon and key parts of Gyeonggi as land transaction permit zones for foreign buyers. However, with local elections looming next year, internal dissent within the ruling party could scale back the final scope of these zones.

Due to the current lending restrictions in Seoul’s affluent districts of Gangnam, Songpa and Seocho, many real demand buyers are turning to Bundang and other areas along the Han River Belt — now seen as a last opportunity for gap investment. This has triggered a surge in asking prices and record-high transactions in recent months, fueled in part by wealthy cash buyers from the provinces.

The government is also considering additional lending curbs, including lowering the cap on mortgage loans from 600 million won ($419,000) to 400 million won. One proposal under final review would set the LTV ratio to zero for homes above a certain price threshold, effectively banning mortgage-backed purchases — a move reminiscent of the Moon Jae-in administration’s 15-billion-won cap for mortgage bans in speculation zones.

Finance Minister Koo Yun-cheol answers questions from lawmakers about inheritance tax during a parliamentary audit of the Finance Ministry’s tax affairs by the Strategy and Finance Committee at the National Assembly on Oct. 14. [YONHAP]

Financial regulators, however, are said to be taking a more cautious stance, which could influence the final outcome.

The new policy package may also offer directions on real estate taxation. Finance Minister Koo Yun-cheol said during a parliamentary audit of the finance committee that “a general direction on tax policy is expected to be announced.” When asked about President Lee’s previous campaign pledge not to use taxes as a tool to control housing prices, Koo clarified, “That doesn’t mean we won’t use tax measures — it just means we’ll consider them as a last resort.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY BAEK MIN-JUNG, YEOM JI-HYEON [[email protected]]