Seoul apartment prices rise at fastest pace in 30 weeks
By Yoon Ja-young
As Seoul's housing market is showing signs of overheating, the government is renewing its fight against property speculation, including tax audits and designation of anti-speculation zones.
At a meeting Thursday on key economic issues presided over by Economy and Finance Minister Kim Dong-yeon, the government decided to additionally designate anti-speculation zones in Seoul, which will be subject to tougher regulations.
Currently, the metropolitan city's upscale southern districts of Gangnam-gu and Songpa-gu are designated as anti-speculation zones, as are Mapo-gu, Yongsan-gu, Seongdong-gu, Yeongdeungpo-gu and Nowon-gu.
The market analysts expect districts of Jongno-gu, Jung-gu, Dongdaemun-gu and Dongjak-gu, which saw steep rise but are not designated as such as of yet are likely to be newly subject to the strict restriction. The designation may come as early as next week.
Seoul apartments have been showing signs of stabilizing following implementation of heavy capital gains taxes on owners of multiple homes starting in April as well as a property tax hike announced in July.
However, prices have been rising through the roof all around Seoul following Seoul Mayor Park Won-soon's announcement of development plans.
According to the latest data by the Korea Appraisal Board, prices of Seoul apartments rose 0.37 percent from the previous week, marking the steepest jump in 30 weeks. The rise was previously limited to upscale southern districts, but now it is jumping everywhere.
Yeouido and Yongsan, for which the mayor unveiled comprehensive development plans, saw apartment prices continuing their steep rise, and Yangcheon-gu and Jungnang-gu where the mayor said light rail train lines will be built are also making a quantum jump.
A 95-square-meter apartment in Yangcheon-gu's Mokdong, for instance, was sold recently at 1.57 billion won ($1.4 million), jumping from 1.2 billion won earlier this year.
"The apartments saw around a 40 million won rise following the announcement of the plan to develop Yeouido and Yongsan, and the recent plan to build a light rail in Mokdong prompted homeowners to withdraw plans to sell their apartments," a real estate agent in Mokdong said.
The land ministry is vowing to toughen regulations.
"If the housing market shows signs of overheating or the rise expands to other regions, we will come up with additional measures quickly. We will also consider further supply plans for newlyweds and young people," a land ministry official said.
The tax agency is also strengthening its tax audits on speculators while the financial regulator will examine whether those who purchase homes have violated the mortgage regulations such as the loan-to-value (LTV) and debt-to-income (DTI) ratios.
Those ratios restrict the amount of mortgages one can take out according to the value of the home or the income of the debtor. As more people purchase homes, the balance of mortgages increased by 6 trillion won in the second quarter from the previous quarter, pulling up the balance of total household debt to a record-high 1493.2 trillion won.
"Demand is likely to slow down somewhat following the government's announcement of additional regulations as the housing prices have risen too steep recently," said Lee Mi-yoon, a researcher at Real Estate 114.
In the long run, however, experts say the rise will continue unless Seoul City takes action to stabilize the housing market.
"Seoul City's development plans for Yeouido and Yongsan triggered the recent rise. These are long-term plans that will take at least 10 to 20 years for completion, but it was promoted as if they will be complete within the mayor's term," said Kwon Dae-jung, a professor at Myongji University.
By Yoon Ja-young
As Seoul's housing market is showing signs of overheating, the government is renewing its fight against property speculation, including tax audits and designation of anti-speculation zones.
At a meeting Thursday on key economic issues presided over by Economy and Finance Minister Kim Dong-yeon, the government decided to additionally designate anti-speculation zones in Seoul, which will be subject to tougher regulations.
Currently, the metropolitan city's upscale southern districts of Gangnam-gu and Songpa-gu are designated as anti-speculation zones, as are Mapo-gu, Yongsan-gu, Seongdong-gu, Yeongdeungpo-gu and Nowon-gu.
The market analysts expect districts of Jongno-gu, Jung-gu, Dongdaemun-gu and Dongjak-gu, which saw steep rise but are not designated as such as of yet are likely to be newly subject to the strict restriction. The designation may come as early as next week.
![[0825_apartment price] /2018-08-24(코리아타임스)](https://img.koreatimes.co.kr/upload/newsV2/images/201808/bd2813f9edb64525af43a5885b27f02a.jpg/dims/resize/740/optimize) |
| [0825_apartment price] /2018-08-24(코리아타임스) |
Seoul apartments have been showing signs of stabilizing following implementation of heavy capital gains taxes on owners of multiple homes starting in April as well as a property tax hike announced in July.
However, prices have been rising through the roof all around Seoul following Seoul Mayor Park Won-soon's announcement of development plans.
According to the latest data by the Korea Appraisal Board, prices of Seoul apartments rose 0.37 percent from the previous week, marking the steepest jump in 30 weeks. The rise was previously limited to upscale southern districts, but now it is jumping everywhere.
Yeouido and Yongsan, for which the mayor unveiled comprehensive development plans, saw apartment prices continuing their steep rise, and Yangcheon-gu and Jungnang-gu where the mayor said light rail train lines will be built are also making a quantum jump.
A 95-square-meter apartment in Yangcheon-gu's Mokdong, for instance, was sold recently at 1.57 billion won ($1.4 million), jumping from 1.2 billion won earlier this year.
"The apartments saw around a 40 million won rise following the announcement of the plan to develop Yeouido and Yongsan, and the recent plan to build a light rail in Mokdong prompted homeowners to withdraw plans to sell their apartments," a real estate agent in Mokdong said.
The land ministry is vowing to toughen regulations.
"If the housing market shows signs of overheating or the rise expands to other regions, we will come up with additional measures quickly. We will also consider further supply plans for newlyweds and young people," a land ministry official said.
The tax agency is also strengthening its tax audits on speculators while the financial regulator will examine whether those who purchase homes have violated the mortgage regulations such as the loan-to-value (LTV) and debt-to-income (DTI) ratios.
Those ratios restrict the amount of mortgages one can take out according to the value of the home or the income of the debtor. As more people purchase homes, the balance of mortgages increased by 6 trillion won in the second quarter from the previous quarter, pulling up the balance of total household debt to a record-high 1493.2 trillion won.
"Demand is likely to slow down somewhat following the government's announcement of additional regulations as the housing prices have risen too steep recently," said Lee Mi-yoon, a researcher at Real Estate 114.
In the long run, however, experts say the rise will continue unless Seoul City takes action to stabilize the housing market.
"Seoul City's development plans for Yeouido and Yongsan triggered the recent rise. These are long-term plans that will take at least 10 to 20 years for completion, but it was promoted as if they will be complete within the mayor's term," said Kwon Dae-jung, a professor at Myongji University.
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