South Korea Designates Areas as Regulated Zones Amid Housing Price Surge

Areas in Gyeonggi Province, including Dongtan in Hwaseong City and Giheung in Yongin City, along with Guri City, are set to be designated as regulated zones and land transaction permit zones starting July 1. This move by the Ministry of Land, Infrastructure, and Transport comes in response to significant surges in housing prices in these regions.

The designations will classify these areas as either 'adjustment target areas' or 'speculative overheated areas.' The land transaction permit zones will be in effect from July 5, 2026, until December 31, 2027. The government aims to curb speculative buying and protect genuine homebuyers by implementing these stricter regulations.

In regulated zones, the loan-to-value (LTV) ratio for homeowners, including those with conditional ownership, will be tightened from the previous 70% to 40%. The maximum loan amount will be differentiated based on housing prices, ranging from 600 million won for homes valued up to 1.5 billion won, down to 200 million won for homes exceeding 2.5 billion won. Those who already own multiple properties will face an LTV of 0%, effectively barring them from obtaining new loans.

Further restrictions include limitations on re-applying for housing subscriptions and increased acquisition and capital gains taxes for multiple homeowners. In land transaction permit zones, buyers will require local government approval to purchase property and must reside in the home for two years, making speculative 'gap investment' (buying a property with a tenant already in place) impossible. The Ministry stated it will enhance monitoring of price-increasing areas and strictly address any illegal activities disrupting the real estate market.