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Regulations to be eased except capital city and four Gyeonggi regions

Regulations to be eased except capital city and four Gyeonggi regions

Posted November. 11, 2022 07:54,   

Updated November. 11, 2022 07:54


The South Korean government will ease real estate regulations across the nation except for Gwacheon, Seongnam (Bundang-gu and Sujeong-gu), Hanam, and Gwangmyeong in Gyeonggi Province, as well as Seoul. Added to this, starting from December, earlier than planned, the loan-to-value (LTV) ratio for first-time homebuyers within the regulated regions will decrease to 50 percent while home mortgage plans will be available for the purchase of apartment units with a going rate of over 1.5 billion won in the overheated speculation zones.

A series of government measures aim to prevent a hard landing that may occur due to the ever-decreasing housing prices and the scarcity of housing sales. The Ministry of Economy and Finance, the Ministry of Land, Infrastructure, and Transport, and the Financial Supervisory Service announced a plan to respond to the current housing market following the 3rd ministerial meeting on the real estate market on Thursday.

As of Monday midnight, nine regions will be excluded from the list of overheated speculation zones such as Suwon, Anyang, Guri, Gunpo, Uiwang, Suji-gu and Giheung-gu in Yongin, Hwaseong, Dongtan 2 New Town, and Danwon-gu in Ansan. Likewise, a total of 31 regulated areas will be canceled, including 22 regions in Gyeonggi Province and eight areas in Incheon and Sejong. Minister of Land, Infrastructure, and Transportation Won Hee-ryong explained that the decision had been made because it has become harder for non-speculative home seekers to engage in home transactions.

The easing of mortgage loan regulation, announced in an emergency economic and public livelihood meeting on Nov. 27 to lessen the burden of actual home buyers and revitalize home transactions, will be performed in December, one month earlier than reported. With this action to be taken, first-time home buyers can take out a mortgage loan up to the LTV of 50 percent regardless of the price of a house in any regulated area. The limit of preferential loans for working-class people with actual housing demand will be increased from 400 million won to 600 million won. Also, mortgage loans will possibly be taken out concerning over 1.5-billion-won apartment units if they aim to return a jeonse deposit. “Housing prices will inevitably go down to some degree,” Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho commented. “However, we should use caution as there is a possibility that the market will freeze instantly amid the recent interest rate hikes.”

Apartment units in Seoul plummeted 0.38 percent compared to a week ago as of Monday, the largest drop since related data were first collected in May 2012, according to the Korea Real Estate Board. Likewise, the decrease rates across the nation (-0.39 percent) and in the capital area (-0.47 percent) showed the largest drop in history, only increasing concerns over a hard landing in the real estate market. “The latest measures may play a part in normalizing the regulation system, which, however, will not likely stop housing prices from decreasing or address the lack of transactions due to the increasing interest rates,” said Song In-ho, the head of the Economic Information and Education Center as part of the Korea Development Institute.

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