S. Korea to lift real-estate regulations in most areas in Seoul

Apartment complex in Songpa [Photo by Park Hyung-ki]

Real-estate regulations in South Korea will be lifted in all areas in the capital city Seoul, except three districts in affluent Gangnam, the most expensive real estate market in Korea, as the country’s once-hot property market shows signs of a slump with many unsold apartment units and falling real estate prices.

According to multiple sources from the presidential office and government ministries on Monday, the Ministry of Land, Infrastructure, and Transport will announce areas in Seoul that will be free from the government’s strict real-estate regulations this month. Regulations on all areas in the capital city outside three districts in Gangnam are expected to be lifted.

The land ministry lifted real estate restrictions in many areas last year including those in Gyeonggi Province and Incheon near Seoul. Currently, Seoul and four cities in Gyeonggi Province - Gwacheon, Seongnam, Hanam, and Gwangmyeong - are designated as overheated speculative zones and target areas for adjustment.

Fifteen areas in Seoul in particular including Yongsan, Seongdong, Nowon, Seocho, Gangnam, Songpa, Gangdong, and Jongno, are labeled as housing speculation zone. The land ministry, however, is expected to remove restrictions in all areas except three districts in Gangnam - Seocho, Gangnam, and Songpa - and Yongsan.

The government’s move to lift real-estate housing regulations in Seoul comes as the housing market shows signs of a slump with prices heading south and many unsold apartment units.

Housing prices in Seoul fell by an average of 2.59 percent between September and November and in Gyeonggi Province 3.68 percent, according to data from Korea Real Estate Board. Prices in restricted zones fell beyond the average - 6.85 percent in Gwangmyeong, 4.36 percent in Hanam, and 3.75 percent in Gwacheon. Housing prices in Nowon District in northern Seoul declined 5.47 percent over the three month period, which is more than double the average in Seoul, and Dobong District 4.11 percent.

Following the eased regultaions, comprehensive real estate holding tax and capital gains tax will decline and the loan-to-value ratio will be raised.

The land ministry is also expected to downsize the number of areas under price ceiling on new apartments.