Korean government steps in with tough regulations to curb Seoul’s overheating property prices
As Seoul’s housing market shows signs of overheating, the government is renewing its fight against property speculation by increasing taxes and earmarking anti-speculation zones in South Korea’s capital.
Flat prices in South Korea’s capital have been showing signs of stabilising following the 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 across the city following mayor Park Won-soon’s announcement of development plans.
At a meeting last Thursday presided over by Kim Dong-yeon, the economy and finance minister, the government decided to add more anti-speculation zones in Seoul, which will be subject to tougher regulations.
Currently, the 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.
Market observers expect the districts of Jongno-gu, Jung-gu, Dongdaemun-gu and Dongjak-gu, which have seen steep rises but are not designated as such so far, are likely to be subject to the strict restrictions.
The designation may come as early as next week.
According to the latest data by the Korea Appraisal Board, prices of Seoul flats rose 0.37 per cent from the previous week, marking the steepest jump in 30 weeks. The rise was previously limited to upscale southern districts, but now it is rising everywhere.
“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.
“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 completed within the mayor’s term,” said Kwon Dae-jung, a professor at Myongji University.