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The dilemma of Korea's Oct. 15 housing measures

Published: 02 Dec. 2025, 00:04

Park Tae-won

The author is the president of the Urban Design Association of Korea and a professor of urban planning and real estate at Kwangwoon University.

The government's Oct. 15 housing market stabilization measures, which imposed strict transaction and loan restrictions in parts of Seoul and Gyeonggi where prices had surged, have cooled the overheated market and slowed the sharp rise in home prices in key districts of the capital.

The shift reflects a clear reduction in speculative buying by nonresidents and of fears that homes would soon become unaffordable.

Apartment buildings are seen from Mount Nam in Jung District, central Seoul, on Nov. 14. [NEWS1]

Still, concerns remain beneath the apparent progress. The rigid lending rules, applied without exception, have made it difficult even for end users to complete purchases. The designation of land transaction permit zones has also raised procedural hurdles, amplifying worries that the market may lose momentum.

Market data already points in this direction. Apartment transactions in Seoul dropped roughly 70 percent in the month following the announcement. Meanwhile, the number of available rental units has also fallen, pushing jeonse, or long-term housing rental deposit, prices higher. In the 21 districts of Seoul and the 12 cities and districts in Gyeonggi Province newly added to the regulated list under the Oct. 15 measures, jeonse prices rose 2.8 percent in Seoul and 2 percent in Gyeonggi in one month. The decline in listings stems from mandatory occupancy rules in permit zones and restrictions on jeonse loans. Continued enforcement could fuel further rent increases.

The administration of President Lee Jae Myung has rolled out successive housing measures since taking office. Price gains that began in central Seoul were spreading outward, raising the risk of a broader surge across the capital region. From the government’s perspective, swift and forceful action was likely seen as unavoidable.

Yet the Oct. 15 package functions largely as a temporary freeze. It encourages price stability by creating a stalemate in which neither buyers nor sellers can act easily. While this may dampen overheating in the short term, it does not address the deeper structural problems driving instability. Policies that prevent normal market activity cannot be sustained. The measures have slowed the fire, but the fuel beneath it remains.

A more durable solution must begin with the fundamentals: housing supply. Large-scale land development, urban renewal and reconstruction of aging planned cities need to move with greater urgency. Smaller, faster projects can also play an important role. These include small-lot redevelopment, new housing on idle urban land and the use of public or state-owned sites to bring supply onstream more quickly.

Easing the concentration of demand on newly built homes will also require expanded support for renovating existing housing and improving residential environments. Over the long term, Seoul's heavily concentrated single-core urban structure must be rebalanced. By developing multiple competitive residential hubs outside of Gangnam, the capital region could shift toward a more stable multicore pattern.

Loan regulations should be recalibrated with similar care. While the government may hesitate to loosen lending rules amid uncertainty, the current framework prevents the market from functioning normally. Regulations should focus on curbing borrowing that exceeds household repayment capacity rather than blocking genuine end-user demand. Loans for owner-occupiers should be eased gradually to restore proper market activity.

Real estate listings are posted on a real estate agency in Seoul on Nov. 17. [NEWS1]

The broader regulatory framework also needs refinement. Policymakers should move away from the idea of mobilizing every available regulatory tool regardless of intent. The land transaction permit zone system was created to curb speculation tied to development projects, not to serve as a general housing market control mechanism. If additional stabilization tools are required, it makes more sense to adjust existing categories, such as speculative zones or adjustment zones.

Because speculative zones, adjustment zones and speculation-prone districts contain overlapping rules and often cause confusion, consolidating these designations into a clearer, unified system would help restore predictability and reduce administrative complexity.

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.