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The Republic of Real Estate Speculation

Posted July. 16, 2005 03:05,   


Nine areas, including Gwangjin and Geumcheon districts in Seoul, Gwacheon and Yong-in cities in Gyeonggi Province and Eumseong County in North Chungcheong Province have been designated as land speculation zones.

Four other areas, including Gunpo City in Gyeonggi Province and Heungdeok District in Cheongju City, North Chungcheong Province, have been selected as housing speculation zones.

The government held a meeting of its Deliberation Council on Stabilizing Real Estate Prices on July 15 to confirm all of 13 candidate sites as housing and land speculative zones.

Newly designated as land speculative zones are: Geumcheon and Gwangjin districts, Seoul; Yeongtong District, Suwon City, Gyeonggi Province; Dongan District, Anyang City, Gyeonggi Province; Gwacheon and Yong-in cities, Gyeonggi Province; Dong District, Daejeon City; Eumseong County, North Chungcheong Province; and Muju County, North Jeolla Province.

Housing speculation zones designated by the government are: Gunpo City, Gyeonggi Province; Heungdeok District, Cheongju City, North Chungcheong Province; Gumi City, North Gyeongsang Province; and Nam District, Ulsan City.

Starting July 20 when the designation will officially be announced, one will have to pay transfer income taxes on the basis of actual transaction prices, not standard prices, when selling houses or lands in these areas.

With the government decision on this day, the number of land speculation zones rose from 63 to 72 and the number of housing speculation zones from 45 to 49. This means that 29.1 percent and 19.8 percent out of 248 administrative units nationwide are designated as land and housing speculation zones, respectively.

The Ministry of Finance and Economy (MOFE) explained that it designated all the candidate sites as speculative areas due to the continuing surge in land prices. The average increase rate in land prices nationwide in May reached this year’s highest level of 0.56 percent.

An area is designated as a housing speculative zone when its land price increase rate in the previous month is more than 30 percent higher than the increase rate in consumer prices and its average land prices increase rate in two consecutive months and is over 30 percent higher than the average increase rate in land prices nationwide.

Chi-Young Shin higgledy@donga.com