[비즈한국] On March 19, 2025, the government announced housing market stabilization measures to curb the rapid surge in the Seoul housing market. This package includes the re-designation of Land Transaction Permit Zones (LTPZ)—which were expanded primarily in high-end areas such as Gangnam, Seocho, Songpa, and Yongsan districts—as well as strengthened financial regulations and expanded housing supply.
However, there is significant dissatisfaction among the public and the market because these measures reimpose regulations without any reflection on the fact that the LTPZ was lifted just one month prior in February. In this column, I intend to provide an in-depth analysis of the key details of the March 19 measures, the market’s reaction, the problems with these actions, and the future outlook.
First, let’s summarize the key points of the March 19 measures.
① Re-designation and expansion of Land Transaction Permit Zones (LTPZ)
The core of this measure is the re-designation and expansion of Land Transaction Permit Zones. The government has re-designated LTPZs covering approximately 2,200 apartment complexes (about 400,000 units) in key high-end areas of Seoul, including Gangnam, Seocho, Songpa, and Yongsan. This move, taken without any reflection on the lifting of the LTPZ just one month earlier in February, is sparking market backlash.
The re-designation of the LTPZ will be in effect for six months starting March 24, with potential for further extension if necessary. Existing designated areas such as Apgujeong, Yeouido, Mok-dong, and Seongsu-dong remain in effect. The government explained that this measure is intended to curb short-term housing price increases and promote market stability.
② Review of designation for Adjustment Target Areas and Speculative Zones
If market instability persists after the re-designation of LTPZs, the government is considering additional designations for Adjustment Target Areas and Speculative Zones. These areas are subject to stringent regulations, including loan restrictions (LTV, DTI), increased tax burdens (capital gains tax, acquisition tax), limits on re-winning housing subscriptions, and resale restrictions. In particular, heavy taxation on multi-home owners and mandatory submission of funding plans are expected to be strengthened.
③ Strengthening management of financial and household loans
The government plans to strengthen inspections of mortgage loans and jeonse (lump-sum deposit rental) loans, particularly in areas with rapidly rising housing prices, and to enhance autonomous management by financial institutions. Specifically, risk assessments will be strengthened for subordinate mortgage loans on properties that already have senior jeonse loans, and new mortgage loans for multi-home owners will be restricted. Additionally, monitoring of household loans by region in the capital area will be tightened to ensure that new regional loans do not exceed existing repayment amounts.
④ Expansion of housing supply
Various measures were also introduced on the supply side to stabilize the housing market. The government plans to promote legal amendments to accelerate reconstruction and redevelopment projects in downtown Seoul and provide low-interest initial funding loans of up to 5 billion won per project. Furthermore, it aims to supply approximately 110,000 new housing units by the end of the year and expedite supply through purchase guarantees (worth 22 trillion won) for unsold units in public housing sites in the capital area that break ground within the year.
Market reactions to these policies are filled with dissatisfaction and concern.
First, there is backlash against the re-designation of LTPZs.
The biggest outcry concerns the re-designation of the LTPZs. The government’s decision to tighten regulations again, only one month after lifting them in February, is seen as a move that has severely damaged market confidence. Market participants are criticizing the lack of policy consistency and pointing out that this measure is a political decision aimed at short-term market stability.
In particular, the re-designation of the LTPZ risks a sharp decline in housing market liquidity. With housing transactions restricted in these zones, even non-homeowners with genuine housing needs or people looking to move may face difficulties in trading. This is highly likely to lead to market distortions.
Second, there is concern over the tightening of financial regulations.
The tightening of financial regulations is also causing market anxiety. In particular, restrictions on loans for multi-home owners and tighter management of jeonse loans are criticized for potentially harming even those with genuine housing needs. Moreover, the enhanced autonomous management by financial institutions may make loan screenings more stringent, increasing the financial burden on consumers looking to purchase homes.
Third, there are doubts about the effectiveness of supply expansion.
Doubts have been raised regarding the effectiveness of the housing supply expansion plan. While accelerating reconstruction/redevelopment and increasing the supply of new housing may be helpful in the long term, it is difficult for them to have an immediate impact on the market in the short term. Additionally, there are concerns that purchase guarantees for public housing sites could increase the government's fiscal burden.
Let’s look at the future outlook.
First, there is the potential for short-term market stabilization.
These measures are expected to be somewhat effective in curbing the upward trend of housing prices in the short term. The re-designation of LTPZs and the tightening of financial regulations may help suppress speculative demand and cool down market overheating. However, this is likely to be a temporary effect, and additional measures will be needed for long-term market stabilization.
Second, the need for long-term policy direction has increased.
In the long run, a policy direction that addresses the fundamental problems of the housing market is necessary. This should include expanding housing supply, supporting genuine demanders, and maintaining policy consistency. Furthermore, the government must actively reflect the opinions of market participants in the policy-making process to restore market confidence.
Third, restoring the trust of market participants must be a priority.
As the trust of market participants has been significantly damaged by these measures, the government must work to restore it. Maintaining policy consistency, closely monitoring market reactions, and maintaining a flexible attitude that allows for adjustments when necessary are essential.
The March 19 housing market stabilization measures aim for short-term market stability, but they carry several problems, such as a lack of policy consistency and insufficient consideration for genuine demanders. The government should closely monitor the effects of these measures while preparing a strategy for long-term housing market stabilization. Moreover, efforts are needed to maintain transparency and consistency in the policy-making process to restore the trust of market participants. Since the housing market is a crucial issue directly linked to the quality of life of the people, the government must approach it from a long-term perspective rather than stopping at short-term responses.
Kim Hak-ryul, head of the Smart Tube Real Estate Research Institute, well-known by his pen name "Pashong," served as the team leader of the Real Estate Research Division at Gallup Korea. He operates and hosts the Naver blog "Pashong's World Exploration" and the YouTube channel "Stew TV." He is the author of books including "The Power of Gyeonggi-do Real Estate (2024)," "Absolute Principles of Seoul Real Estate (2023)," "The Future of Incheon Real Estate (2022)," "Kim Hak-ryul's Absolute Principles of Real Estate Investment (2022)," "The Future Map of South Korean Real Estate (2021)," "From Now On, Only Places That Will Rise Will Rise (2020)," and "South Korean Real Estate User Manual (2020)."