Property transactions come to screeching halt first day after government regulations

Just a day after the government’s latest real estate crackdown took effect, Seoul’s once-frenzied property market has gone quiet — and brokers say the phones have stopped ringing.

People look at apartments across Seoul from N Seoul Tower in central Seoul on Oct. 16. [NEWS1]

Just a day after the government’s latest real estate crackdown took effect, Seoul’s once-frenzied property market has gone quiet — and brokers say the phones have stopped ringing.

“The phone was ringing off the hook yesterday — today, not a single call,” a Realtor who works in Yeongdeungpo District, Western Seoul, said on Thursday.

Despite the neighborhood's appeal as a redevelopment zone, prices for 84-square-meter (904-square-feet) apartments surged from the 1.5 billion won ($1.1 million) range just months ago to 1.86 billion won recently.

“Because lending limits take effect today, people were signing contracts late into the night yesterday,” the Realtor said. “But today, I’m only hearing from anxious homeowners who can no longer sell apartments with tenants under jeonse [lump sum rents] leases.”

Under the new regulations, all of Seoul and 12 cities and districts in southern Gyeonggi have been reclassified as regulated zones — including both areas subject to tightened lending rules and speculative zones.

The reclassification, which took effect Oct. 16, means reduced mortgage availability. However, land transaction permit requirements won’t be enforced until Oct. 20, allowing a short window for so-called “gap investments” — purchases of occupied units using loans while deferring full payment until the lease ends.

Real estate agents are calling it the market’s “last five-day stretch” or a “golden time” before the stricter land permit regulations take hold.

Property listings are posted at a real estate agency in Seoul on Oct. 16, the first day of strengthened lending regulations for homebuyers. [NEWS1]

But in practice, slashed mortgage limits have already cooled activity. At a brokerage in western Seoul's Ahyeon-dong, Mapo District, an agent said the average price for an 84-square-meter unit there is now 2.5 to 2.6 billion won, making the new loan limit a mere 200 million won.

“Buyers are hesitating — they think it’s just not realistic now,” he said. “One client who sold in Mapo to buy in Gangnam is now in a bind — they already bought the Gangnam apartment, but the Mapo unit can’t be sold under the new rules.”

In contrast, areas with more midrange apartments under 1.5 billion won are seeing modest buyer interest. In Sanggye-dong, Nowon District, northern Seoul, where 59-square-meter apartments go for around 700 million won, an agent reported increased inquiries from buyers in their 30s. “With jeonse deposits around 300 million won, they see it as an accessible investment,” the agent said.

In Suji District, Yongin, Gyeonggi, an agent noted that two urgent sales went through that day alone, each priced more than 100 million won below market value.

“Owners are worried they won’t be able to sell once the land permit zone kicks in,” they said.

But on the other hand, areas left out of the new regulations are now seeing a spike in interest. One realtor in Dongtan 2 New Town in Hwaseong, Gyeonggi, said, “We’ve had nonstop buyer inquiries since this morning.”

For the popular Dongtan Station Lotte Castle complex, asking prices have risen by 100 to 150 million won overnight — with 84-square-meter units now listed at 1.7 to 1.8 billion won, up from just over 1.6 billion won last month.

“Smaller 59-square-meter units are in the 900 million to 1 billion won range, and when you factor in jeonse deposits of 400 to 500 million won, the investment feels much more affordable,” they added.

A broker in Manan District, Anyang, also reported a surge. “Our 59-square-meter listings are around 700 to 800 million won, with jeonse deposits in the mid-400 million won range. Gap investment calls have been flooding in — we’ve been swamped all day.”

Apartments near Dongtan Station in Hwaseong, Gyeonggi, on Oct. 16 [JEONG EUN-HYE]

“We’re likely to see sustained buying interest in deregulated areas that are also preferred as living areas,” said Park Hab-soo, an adjunct professor at Konkuk University’s graduate school of real estate. “On the other hand, newly regulated outer Seoul and Gyeonggi areas, where prices haven’t surged as much, may become hotbeds of dissatisfaction.”

That sentiment is already visible in areas like Suwon and Uiwang. Seven districts — including Yeongtong, Jangan and Paldal in Suwon — were reclassified as regulated zones in this round after being removed from the list in November 2022. Yet, apartment prices in all seven have fallen over the past three years.

From October 2022 to September this year, Uiwang saw a 14.93 percent drop in apartment prices, followed by declines in Suwon’s Jangan by 9.18 percent and Yeongtong by 8.55 percent, as well as Seongnam’s Jungwon dropping by 8.71 percent.

“If they want to control prices, they should target areas that actually saw big increases,” a Yeongtong resident said with frustration. “Why extend this to places in Gyeonggi where prices fell? Hearing that prices are jumping in deregulated Dongtan only makes it more infuriating.”

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, JEONG EUN-HYE [shin.minhee@joongang.co.kr]