[비즈한국] One month after the government announced the October 15 real estate measures, which designated all of Seoul and 12 regions in Gyeonggi-do as regulated areas and land transaction permit zones, it has been confirmed that apartment sales in these newly regulated areas have dropped by more than half compared to the previous month. Conversely, transaction volumes in the existing regulated areas—Seoul's Gangnam 3 districts (Gangnam-gu, Seocho-gu, Songpa-gu) and Yongsan-gu—have nearly doubled during the same period.
According to an analysis by BizHankook on the 15th of the actual transaction data from the Ministry of Land, Infrastructure and Transport, apartment sales in the 33 newly designated regulated areas (adjustment target areas and speculative districts) under the October 15 real estate measures fell from 15,112 units in the month before the announcement to 6,872 units in the month following the announcement, a decrease of 8,240 units (55%). Sales dropped by 5,115 units (56%) across 21 regions in Seoul and by 3,125 units (52%) across 12 regions in Gyeonggi-do. As the deadline for reporting real estate transactions is within 30 days from the contract date, sales contracts signed up to the 14th of last month must be reported by the 14th of this month.
Among the newly regulated areas, the region with the largest decline in apartment sales is Seongdong-gu, Seoul. Transaction volume fell from 611 units in the month prior to the October 15 measures to 116 units in the month following, a 445-unit (73%) decrease. Other areas with significant declines include Bundang-gu, Seongnam-si, Gyeonggi-do (-71%, -704 units), Mapo-gu, Seoul (-69%, -415 units), Sujeong-gu, Seongnam-si, Gyeonggi-do (-68%, -209 units), Gangdong-gu, Seoul (-68%, -572 units), Jungwon-gu, Seongnam-si, Gyeonggi-do (-67%, -174 units), Dongjak-gu, Seoul (-65%, -362 units), Yeongdeungpo-gu, Seoul (-62%, -356 units), Hanam-si, Gyeonggi-do (-60%, -447 units), and Jung-gu, Seoul (-60%, -111 units).
Some apartment sales contracts that were signed in the newly regulated areas were cancelled after the October 15 measures were announced. Out of 15,668 apartment sales in these areas in the month before the announcement, 556 cases (4%) were cancelled. Of these, 448 cases (3%) were cancelled after the October 15 announcement. In contrast, among the 7,039 apartment sales in the month following the announcement, only 167 cases (2%) were cancelled. However, the October 15 measures do not apply to existing contractors who signed sales contracts and paid a down payment by the date of the announcement.
In contrast, apartment transactions in the existing regulated areas—the Gangnam 3 districts and Yongsan-gu—increased nearly twofold. It was confirmed that transactions rose from 789 units in the month before the October 15 measures to 1,563 units in the month after, an increase of 774 units (98%). Seocho-gu saw an increase of 188 units (169%) from 111 to 299 units; Songpa-gu rose by 358 units (95%) from 377 to 735; Gangnam-gu increased by 177 units (86%) from 207 to 384; and Yongsan-gu grew by 51 units (54%) from 94 to 145. The Gangnam 3 districts and Yongsan-gu were already designated as regulated areas and land transaction permit zones prior to the October 15 measures.
Lee Eun-hyung, a research fellow at the Research Institute of Construction Policy, analyzed, "Because loan regulations and requirements for actual residence are strengthened in regulated areas and land transaction permit zones, transaction volume is bound to decrease significantly in newly designated areas." She added, "For the Gangnam 3 districts and Yongsan-gu, which were already tied up as regulated areas and land transaction permit zones before the October 15 measures, it appears that transaction volumes increased due to the preference for 'one quality home' and the resolution of the comparative disadvantage of being the only 'existing regulated areas' in Seoul."
On October 15, the government introduced strong demand-suppression measures, designating all of Seoul and 12 regions in Gyeonggi-do as regulated areas and land transaction permit zones. The scope of regulated areas, which was previously limited to Seoul's Gangnam 3 districts and Yongsan-gu, was significantly expanded to include all 25 autonomous districts in Seoul and 12 regions in Gyeonggi-do, including Gwacheon-si, Gwangmyeong-si, Suwon-si (Yeongtong-gu, Jangan-gu, Paldal-gu), Seongnam-si (Bundang-gu, Sujeong-gu, Jungwon-gu), Anyang-si (Dongan-gu), Yongin-si (Suji-gu), Uiwang-si, and Hanam-si. New regulated areas under the October 15 measures were designated on the 16th, the date of the official gazette announcement, and new land transaction permit zones were designated on the 20th, five days after the gazette announcement.
The core of the October 15 real estate measures is the expansion of regulated areas subject to stringent loan restrictions. Once designated as a regulated area, the Loan-to-Value (LTV) ratio for non-homeowners and single-homeowners planning to dispose of their existing home is reduced from 70% to 40%, and the Debt-to-Income (DTI) ratio is tightened to 40%. This makes it more difficult to buy a home with borrowed funds. Other regulations, such as heavy taxation on acquisition and capital gains, as well as restrictions on re-applying for housing subscriptions and reselling pre-sale rights, also apply (Related article: Lee Jae-myung administration unveils 'super-strong' real estate regulations... All of Seoul designated as a regulated area).