Dongtan, Guri, and Giheung Face New Regulations Amid Last-Minute Market Uncertainty

[Anchor]

Dongtan-gu in Hwaseong, Giheung-gu in Yongin, and the city of Guri, which have recently seen sharp increases in housing prices, have been designated as regulated areas. Moving forward, loan regulations will be significantly tightened, and these areas will also be designated as land transaction permit zones. With these powerful, comprehensive measures in place, the upward trend in housing prices is expected to slow down for the time being.

Reporter Lee Seonghun has the story.

[Reporter]

Dongtan, Guri, and Giheung, where housing prices have recently surged, have ultimately been targeted for additional government regulations.

Starting tomorrow, July 1, these areas will be designated as speculative overheating zones and adjustment target areas. From the 5th of next month, they will also be subject to land transaction permit requirements, effectively placing them under a triple-layered regulatory framework.

This action was taken because the market had overheated due to a balloon effect following their exclusion from regulated areas last year, compounded by the payment of large performance bonuses by semiconductor companies.

As of last week, apartment prices in Dongtan-gu had risen by 11.38% this year, marking the highest growth rate in the country, while Guri rose by 7.87% and Giheung-gu by 6.21%.

[Lee Yu-ri / Director of Housing Policy Division, Ministry of Land, Infrastructure and Transport: To respond to the overheating of the housing market, we are designating Hwaseong Dongtan, Yongin Giheung, and Guri as adjustment target areas and speculative overheating zones, and we are designating these same areas in Gyeonggi Province as land transaction permit zones.]

With this designation, the Loan-to-Value (LTV) ratio for those who do not own a home will be reduced from the current 70% to 40%, and new mortgage loans for existing homeowners will be effectively blocked.

The limit on mortgage loans will also be capped at a maximum of 600 million won, depending on the housing price.

In particular, the designation as a land transaction permit zone imposes a mandatory residency requirement, which is expected to make so-called gap investments—buying a home with a tenant already in place—virtually impossible.

One day before the regulations take effect, real estate agencies saw intense last-minute maneuvering between buyers and sellers.

[Lee Jung-heon / Real Estate Agent in Dongtan-gu, Hwaseong: Some have lowered their asking prices, while others have pulled their properties off the market. From a buyer's perspective, they see this as the last chance to buy a property with an existing lease for a gap investment, so there are quite a lot of inquiries about those properties.]

With the designation of these regulated areas, market transactions are expected to shrink for the time being, leading to a slowdown in price growth.

However, as prices have already risen significantly, some critics argue that these are reactive measures. Others analyze 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 balloon effect spreading to surrounding areas such as Namyangju and Gwonseon-gu in Suwon.

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

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

Reported by Lee Seonghun | Video by Kim Jun-hee | VJ by Jeong Han-wook
※ Please note: This article was translated by AI and may contain errors.