Dongtan, Guri, and Giheung Face Triple Regulations to Curb Balloon Effect

[Anchor]

Hwaseong’s Dongtan District, Yongin’s Giheung District, and the city of Guri, which have recently seen sharp spikes in housing prices, have been designated as regulated areas. With tightened loan restrictions and the imposition of land transaction permit zones, gap investment has become effectively difficult.

Reporter Lee Seonghun has the story.

[Reporter]

Dongtan, Guri, and Giheung, where housing prices have surged recently, have finally been placed under additional government regulations.

Starting today (July 1), these areas have been designated as speculative overheating zones and adjustment target areas. From the 5th of next month, they will also be subject to land transaction permit zones, effectively facing a triple regulatory burden.

This move comes as the market overheated due to a balloon effect following their exclusion from regulated areas last year, compounded by large performance bonuses paid by semiconductor companies.

As of last week, apartment prices in Dongtan District have risen by 11.38% this year, the highest rate in the country, while Guri and Giheung District saw increases of 7.87% and 6.21%, respectively.

With this designation, the Loan-to-Value (LTV) ratio for those without homes will be reduced from the existing 70% to 40%, and new mortgage loans for existing homeowners will be effectively blocked.

Mortgage loan limits will also be capped at a maximum of 600 million won, depending on the housing price.

In particular, the designation as land transaction permit zones mandates actual residency, making so-called gap investments—buying a home with a tenant already in place—virtually impossible.

On the day before the regulations took effect, real estate agencies saw intense tension between buyers and sellers making last-minute decisions.

[Interview: Lee Jeong-heon / Real Estate Agent in Dongtan District, Hwaseong] : Some have lowered their asking prices, while others have pulled their properties off the market. For buyers, they see this as the last chance to purchase properties with existing tenants for gap investment, so there are quite a lot of inquiries about those listings.

The designation is expected to dampen transactions and slow down the upward trend in prices for the time being.

However, some analysts argue that because market prices have already risen significantly, these are "too little, too late" measures. They also suggest that it will not be easy to break the upward pressure on housing prices, as real demand remains strong, fueled by the high performance bonuses from semiconductor companies.

Concerns are also being raised about a potential new balloon effect spreading to surrounding areas, such as Namyangju and Suwon’s Gwonsun District.

[Interview: Kim Gyu-jung / Real Estate Analyst at Korea Investment & Securities] : There are concerns that the balloon effect will continue, with demand and capital flowing into areas that remain unregulated, and depending on the conditions, there is a possibility that additional areas will be designated as regulated zones in the future.

The government stated that it will monitor market conditions to determine whether to designate additional regulated areas.

(Video Editing: Kim Jun-hee, VJ: Jeong Han-wook)
※ Please note: This article was translated by AI and may contain errors.