Gov’t sets price ceiling on new apartments in 27 affluent Seoul districts

Nov 07, 2019, 08:56 am

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The government has designated 27 speculation prone areas in Seoul to place a presale price cap on privately built apartments as part of its efforts to curb soaring housing prices.

By AsiaToday reporter Choi Joong-hyun

The government has designated 27 speculation prone areas in Seoul to place a presale price cap on privately built apartments as part of its efforts to curb soaring housing prices.

The Ministry of Land, Infrastructure and Transport revealed Wednesday that the price cap system will be applied to four southern Seoul districts and four other districts in the city, where apartment prices have been surging in recent months, at a housing policy review committee meeting held at Government Complex in Sejong.

The price cap system was first introduced in 2007, but lost its effect in 2015 under the Park Geun-hye government to boost the economy. Some overheated metropolitan areas that were initially expected to be subject to the system, such as Gwacheon and Bundang, were excluded.

During the deliberation, the land ministry designated specific areas of districts in Seoul considering the situation of non-business and general projects, the recent increase in house prices, concerns over high sale prices, and market influence.

Eight areas of Gangnam District (Gaepo, Daechi, Dogok, Samseong, Apgujeong, Yeoksam, Ilwon, Cheongdam), four areas of Seocho District (Jamwon, Banpo, Bangbae, Seocho), eight areas of Songpa District (Jamsil, Garak, Macheon, Songpa, Sincheon, Munjeong, Bangi, Ogeum), two areas of Gangdong District (Gil, Dunchon), one area of Yeongdeungpo District (Yeouido), one area of Mapo District (Ahyeon), two areas of Yongsan District (Hannam, Bogwang), and one area of Seongdong District (Seongsu 1) are subject to the price cap system.

Among them, some areas including Yeouido, Ahyeon, Hannam, and Bogwang have been chosen as there were attempts to avoid the sale price regulation by promoting post-sale or selling to rental housing owners.

New apartments sold in these areas will be subject to the system after eight days of publication in the Gazette. For new apartments that have been redeveloped or reconstructed in these areas, those that apply for a resident recruitment announcement after April 29, 2020, will be subject to the system.

The government predicts that if the system is applied, the sale price of new apartments will be 5-10 percent lower than that of state-run Korea Housing & Urban Guarantee Corporation (HUG).

“The government will be closely monitoring non-designated districts. It will review applying the system to other areas that get overheated,” Land Minister Kim Hyun-mee said.

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