Seoul Real Estate Reels from Government Debt Measures
Seoul’s real estate market is bracing for impact following the government’s tightening of household debt management. The new policies are expected to cause a market slowdown, with potential pauses in sales as buyers and sellers assess the ripple effects of the changes.
Market Reactions and Real Estate Trends
The loan regulations announced on the 27th have caused significant disruption. Real estate agents in areas such as Mapo experienced a surge in inquiries from both purchasers and vendors. One agent in Mapo said the loan regulation announcement triggered “a panic situation.”
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“The day of the loan regulation announcement was a panic situation.”
—Real estate agent, Mapo
According to recent data, the average apartment price in Seoul has risen to ₩1.5 billion, reflecting ongoing demand (Seoul Housing Report).
Impact of Loan Restrictions
The new measures, limited to ₩600 million, will affect 18 of Seoul’s 25 districts. Only seven districts, including Nowon, Dobong, Gangbuk-gu, Geumgwan-gu (Geumcheon, Gwanak, Guro-gu), and Jungnang-gu, can still offer up to a 70% loan-to-value (LTV) ratio without exceeding the ₩600 million limit.
In the remaining districts, non-regulated areas will see a 70% LTV, while Gangnam 3-gu and Yongsan-gu, which are regulated, will have a 50% LTV. These changes are expected to impact 74% of the total apartment inventory in Seoul, excluding lease apartments, affecting approximately 1,276,257 households.
Future Outlook and Government Response
The tightened financial measures are likely to induce a temporary pause in the high-priced apartment sector in Seoul. Park Won-gap, a chief executive expert at KB Kookmin Bank, anticipates a slowdown in the market’s frenzied pace.
The government has indicated it might introduce additional regulatory areas and is considering measures to stabilize the market. The industry suggests that the loan regulations are more impactful than merely designating regulatory areas.
