Home > Business > Economy

Gov't announces real estate clampdown, regulates all of Seoul

Published: 15 Oct. 2025, 18:16

Government officials attend a joint-ministry press briefing on new real estate regulations at the government complex in Jongno District, central Seoul on Oct. 15. From left, National Tax Service Commissioner Lim Kwang-hyun, Director of the Office for Government Policy Coordination Yoon Chang-yul, Deputy Prime Minister and Finance Minister Koo Yun-cheol, Minister of Land, Infrastructure and Transport Kim Yun-duk and Financial Services Commission (FSC) Chairman Lee Eog-weon. [NEWS1]

The Ministry of Land, Infrastructure and Transport announced a sweeping real estate clampdown on Wednesday, expanding regulation zones across all 25 districts of Seoul and 12 areas in Gyeonggi while also designating them as land transaction permit zones — the toughest restriction available under Korean real estate law.

The newly regulated Gyeonggi areas are Gwacheon; Gwangmyeong; Bundang, Sujeong and Jungwon Districts of Seongnam; Yeongtong, Jangan and Paldal Districts of Suwon; Dongan District in Anyang; Suji District in Yongin; Uiwang; and Hanam.

This marks the third major housing measure under the Lee Jae Myung administration, following the June 27 lending restrictions and Sept. 7 housing supply plan, both of which failed to rein in rising home prices in the greater Seoul area.

The new plan applies Korea's strictest tools: land transaction permit zones, expanded regulation zones and tightened loan caps.

Loan rules will become even more stringent. Homebuyers purchasing properties priced over 2.5 billion won ($1.76 million) will be limited to 200 million won in mortgage loans.

Anyone holding more than 100 million won in unsecured loans will be barred from buying homes in regulation zones for one year following the issuance of those loans.

Resident buildings are seen from Namsan Tower in Yongsan District, central Seoul on Oct. 14. [YONHAP]

First-ever land permit zone designation for all of Seoul

Once designated as a land transaction permit zone, buyers are banned from gap investments — sales with jeonse deposits, or long-term housing rental deposits — and must live in the home for two years. The designation takes effect next Monday.

Following the June 27 restrictions, areas such as Seoul’s Mapo and Seongdong Districts, dubbed the “Han River Belt,” and parts of Bundang and Gwacheon saw a surge in demand for high-value “one safe bet” homes. Home prices in some districts rose by 100 million to 300 million won within a matter of months.

Under the new rules, buyers must now cover most of the purchase cost in cash since many of the transactions involved had prohibited investment structures. The required residency rule is also expected to deter speculation — though some worry legitimate demand may also be stifled.

With the regulation zone status expanded, the loan-to-value (LTV) ratio will be reduced from 70 percent to 40 percent. In addition, new caps will apply depending on the home's price.

While buyers of apartments priced below 1.5 billion won in regulated areas can still borrow up to 600 million won, those purchasing apartments priced between 1.5 billion and 2.5 billion won will be capped at 400 million won. Homes priced above 2.5 billion won will have a loan limit of just 200 million won.

For example, someone looking to buy a 59-square-meter (635-square-foot) apartment in Mapo Raemian Prugio for around 2 billion won could previously purchase it by putting up a deposit of 1.2 billion won and adding 800 million won in cash. Going forward, a buyer can only borrow up to 400 million won, so they will need at least 1.6 billion won in cash.

Critics say this effectively limits the market to “cash-rich” buyers, locking out genuine demand from aspiring homeowners.

Apartment complexes are seen from Lotte World Tower in Songpa District, southern Seoul on Oct. 15. [NEWS1]

Nowon, Dobong, Gangbuk districts back under regulation

The previous Yoon Suk Yeol administration lifted all regulations across Seoul in January 2023, keeping only Gangnam, Seocho, Songpa and Yongsan districts under tighter controls. Now, less than three years later, the entire city is regulated once more.

Designation as a regulated zone or speculative district triggers numerous restrictions on loans, taxation, subscription rights, resale and redevelopment projects. These changes take effect immediately on Oct. 16.

LTV for first-time homebuyers will be capped at 40 percent within the 600 million won loan limit. Those owning one or more homes will be ineligible for new mortgages.

Jeonse loans will be reduced to a 200 million won cap, and the guaranteed loan ratio will be cut to 80 percent. Borrowers with more than 100 million won in unsecured loans will be barred from buying homes in regulated areas for one year after the loan is issued.

Property acquisition taxes for owners of two homes and three or more homes will remain elevated at 8 percent and 12 percent, respectively. Capital gains tax will also be applied at higher rates, though that measure is temporarily suspended until May next year. The exemption for capital gains on single-home owners now requires both two years of ownership and two years of residence.

Additional measures include a three-year resale restriction in the greater Seoul area, subscription eligibility limited to heads of households and stricter rules on transferring reconstruction or redevelopment association memberships.

[MINISTRY OF LAND, INFRASTRUCTURE AND TRANSPORT]

Apartment complexes in Gwacheon, Gyeonggi are seen on Oct. 15. [NEWS1]

Experts say the scope of the regulations is so broad that it could grind housing transactions to a halt.

“This new policy focuses on differentiated loan limits by price and using the land transaction permit system to curb speculative gap investing,” said Park Won-gap, a senior real estate analyst at KB Kookmin Bank. “It’s aimed squarely at stopping the price spread from Seoul to southern Gyeonggi — especially areas like Gwacheon, Seongnam, Yongin and Suwon.”

“Except for genuine self-use purchases, transactions could disappear altogether,” said Park Hab-soo, an adjunct professor at Konkuk University’s graduate school of real estate. “The 400 million won cap on loans for apartments priced over 1.5 billion won will block the ability of even mid- to high-end buyers. Market stagnation could persist through the end of the year.”

“Only the high-end market, supported by wealthy buyers holding large cash reserves, will be able to withstand this,” said Yang Ji-young, the chief real estate strategist at Shinhan Investment & Securities.

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-JEONG [[email protected]]