An official of the Ministry of Land, Infrastructure and Transport speaks Thursday in a press briefing at Sejong Government Complex, unveiling the government’s latest measures to curb housing prices in the suburban Gyeonggi Province cities of Suwon, Anyang and Uiwang. (Yonhap)
South Korea’s government on Thursday unveiled additional regulations to curb housing prices, this time focusing mostly on Seoul’s outskirts that have recently gained popularity.
The latest measures marked the 19th housing-related regulations announced since the Moon Jae-in administration took office in May 2017. They were also the first to focus primarily on non-Seoul areas.
The Ministry of Economy and Finance, the Ministry of Land, Infrastructure and Transport, and the Financial Services Commission vowed to curb excessive speculation in some designated areas of the suburban Gyeonggi Province.
Addressing the issue, officials designated three districts in Suwon, one in Anyang and another in Uiwang as special speculative zones, where loan rules and tax rates will be enhanced, taking effect immediately from Friday.
As follow-up actions, starting March 2, authorities will tighten the housing mortgage loan rules for expensive houses in designated areas.
The loan-to-value ratio, which is currently set at 60 percent of the evaluated housing price, will be reduced to 50 percent within the ceiling of 900 million won ($750,500). As for the excess amount that surpasses the 900 million won mark, the LTV will be lowered to 30 percent.
For instance, those wishing to purchase a 1 billion won house in the corresponding area conventionally had access to 600 billion won in mortgage credit line, under the 60 percent LTV rule. But under the forthcoming rule, they will only be able to borrow 480 million won, with 50 percent LTV for the 900 million won and 30 percent LTV for the remaining 100 million won.
As for government-backed special loans designed for low-income individuals, the LTV ceiling will be maintained at the maximum of 70 percent, officials explained.
“Since the Dec. 16 measures, Seoul’s housing prices swiftly stabilized, but (the neighboring) Gyeonggi region has continued to see an uptrend (in prices),” the related government departments said in a joint press release.
Late last year, in its 18th set of comprehensive real estate measures, Seoul’s government activated an unprecedented level of transaction ban and loan restriction for high-priced apartments.
But popular residential areas in Gyeonggi -- mostly in Suwon, Anyang, and Uiwang -- continued to renew their price records, especially following the preliminary approval of a major infrastructure project. The GTX-C high-speed regional rail, once completed, will run across the province, connecting Suwon and Uijeongbu.
The average housing price in Gyeonggi marked a 0.42 percentage point on-week climb during the third week of February -- the corresponding figure for Seoul during the same period.
Also, the National Tax Service will carry out an extensive tax probe on all transactions of expensive houses, focusing on multiple home owners in speculative areas, officials added.