Gov't designates three Gyeonggi areas as regulation zones as real estate prices spike
The Land Ministry and Gyeonggi are cracking down in Dongtan, Giheung and Guri, tightening lending, taxes and land deals to cool surging home prices driven by expanded rail service and the chip boom.
An aerial view of apartment complexes in the Dongtan area of Hwaseong, Gyeonggi, is seen on June 29.YONHAP
The government is clamping down on three of the fastest-rising housing markets in Gyeonggi — Dongtan District in Hwaseong, Giheung District in Yongin and the city of Guri — by designating them as regulated zones to block the inflow of what it calls speculative money amid skyrocketing real estate prices.
The Ministry of Land, Infrastructure and Transport announced Tuesday that it had designated the three areas as "speculative overheating districts" and "adjustment target areas," after the move cleared the Housing Policy Review Committee on Monday.
The two labels are two tiers of the same regulatory system, with the speculative overheating district designation bringing the heavier curbs on real estate transactions.
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Gyeonggi will also designate the same areas as "land transaction permit zones" from Sunday until the end of 2027, a status that requires buyers to win approval from the local authority before purchasing property and to live in the homes they buy for at least two years.
The clampdown follows an unusually sharp run-up in prices, driven by the opening of the GTX-A express rail line and the boom in the semiconductor industry.
In Dongtan and Giheung, expectations tied to the chip boom, combined with the new rail link, drew a concentration of buyers. The GTX-A is the first of Seoul's Great Train Express network, an express commuter line running deep underground. The Dongtan-Suseo leg of the GTX-A opened in 2024.
Monthly home-price growth in Dongtan accelerated from 0.78 percent in February to 1.57 percent in May. Guri, propped up by steady demand around its Seoul-adjacent transit hubs, has held to monthly gains of more than 1.1 percent.
The ministry cast the move as a defense of ordinary buyers.
"The designation is a measure to respond to market overheating, block speculative buying and protect genuine homebuyers," the ministry said.
Apartment prices are seen in front of a real estate agency on June 25.YONHAP
The additions raise the number of speculative overheating districts and adjustment target areas in Gyeonggi from 12 to 15.Once the rules take effect, all three areas will face tight restrictions spanning lending, taxes and housing subscriptions, the state-run system for allocating newly built apartments.
The loan-to-value ratio on a mortgage taken to buy a home will be capped at 40 percent for buyers who own no home, including one-home owners who agree to sell their existing property, while existing homeowners will be barred entirely from new mortgages in the zones. Loans will be capped at 600 million won ($387,000), and borrowers must move into the home they buy within six months of taking out the loan.
Anyone holding more than 100 million won in unsecured loans will be barred from buying a home in the zones for one year from the date of the loan.
On taxes, owners of multiple homes will pay heavier acquisition and capital gains taxes and will lose the special deduction for long-term holding. The exemption for a single home owned by a single household will be tightened to require two years of residence in addition to the existing two-year ownership rule. The resale of pre-sale rights will be locked for three years across the greater Seoul area.
Apartment complexes are seen in the Dongtan area of Hwaseong, Gyeonggi, on June 29.YONHAP
For housing subscriptions, only a household head who has held a subscription account for at least two years will qualify for first-priority status. In the case of privately built apartments, a larger share of units will be allocated through a points-based system that favors households that have gone longer without owning a home, rather than by lottery. The bar on winning a subscription again will lengthen to seven years in adjustment target areas and 10 years in speculative overheating districts.
In land transaction permit zones, buyers must live in the home they purchase for two years from the date of acquisition. Violators face an enforcement penalty or the cancellation of their purchase approval.
The rule is meant to shut down "gap investment." Under jeonse (lump-sum deposit), a tenant pays a large refundable lump-sum deposit instead of monthly rent. A gap investor buys a home that already has such a tenant and needs only enough cash to bridge the gap between the sale price and the deposit, a bet on rising values. The two-year residency rule forces the owner to repay the deposit and live in the home, removing the cheap leverage.
The ministry will respond firmly to any market disruption or illegal activity arising from the designation, while pressing ahead with previously announced supply measures to quickly stabilize the market.
Those measures include the Sept. 7 housing supply plan, a government package unveiled last year to break ground on 1.35 million homes across greater Seoul by 2030; a separate plan to supply 60,000 homes in the region's urban centers; and an expanded pool of more than 66,000 publicly purchased rental units for regulated areas this year and next. The ministry also plans to fully operationalize a cross-government center to resolve on-site obstacles to housing supply and continue developing on-the-ground fixes.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
