Gangnam is focus as property price cap begins

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Gangnam is focus as property price cap begins

In a total of 27 Seoul neighborhoods, preconstruction prices will be capped by the government, according to the Ministry of Land, Infrastructure and Transport on Wednesday.

They are located in eight districts, including three of the wealthiest in the city - Gangnam, Seocho and Songpa.

The government focused like a laser beam on affluent areas south of the Han River, with a total of 22 of the 27 neighborhoods targeted by the ministry in that area.

In Gangnam, eight out of 15 neighborhoods in the district were included. In Seocho, four of 11 made the hit list, while eight of 15 in Songpa were included.

All the designated neighborhoods north of the river were located in an area commonly known as “MaYongSeong,” shorthand for the Mapo, Yongsan and Seongbuk Districts.

Neighborhoods where demand is strong and where prices have been rising too quickly were included.

Starting on Nov. 8, the maximum ceiling will be applied to newly constructed apartments, while for apartment reconstruction projects, the maximum cap will be applied to projects seeking buyers after April 29.

On top of the maximum limit on the preconstruction sales, the owners of the apartments will likely be restricted from selling their apartments for five to 10 years. They will also be required to live in the apartments for a minimum of two years.

Those failing to meet the minimums could face fines.

The Land Ministry said the maximum limit will help lower the prices of preconstruction properties by between 5 and 10 percent.

Land Minister Kim Hyun-mee said the list could be expanded.

“[The government] could add additional areas if there are attempts to dodge the maximum limit on preconstruction sales,” Kim said. “We will seek additional measures that are available if there are any signs of market instability expanding,” he added.

Candidates for future inclusion include neighborhoods in Gyeonggi, such as in Seongnam, Gwacheon, Hanam and Gwangmyeong.

In August, the Land Ministry announced an adjustment of the conditions for applying the maximum limit on preconstruction sales of apartments built on privately-owned land in another attempt to cool the overheating housing market.

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

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