Since the inauguration of President Lee Jae-myung, the government has implemented measures to curb demand, including tightening loan regulations and expanding designated land transaction areas. However, housing prices in central Seoul and key areas of the metropolitan region continue to rise. Despite efforts to reduce mortgage limits and expand regulated areas, the market is experiencing both a slowdown in transactions and a lock-up of listings, along with price differentiation across regions.
According to government and real estate industry sources on June 29, the administration is considering announcing a comprehensive real estate policy by the end of July. This plan may include measures to increase supply and improve tax regulations related to property ownership and capital gains. Relevant ministries, including the Ministry of Finance and Economy, the Ministry of Land, Infrastructure and Transport, and the Financial Services Commission, are reportedly exploring the possibility of holding a "National Real Estate Forum" ahead of the policy announcement.
Last year, the government limited the maximum mortgage amount for home purchases in the metropolitan area and regulated zones to 600 million won through the June 27 measures. Following this, the October 15 measures designated 12 areas, including all of Seoul and parts of Gyeonggi Province, as adjustment and speculative overheating zones, where the land transaction permit system applies to apartment sales.
Regulations on high-value housing loans have also been tightened. In regulated areas, the mortgage limit for homes valued at 1.5 billion won or less remains at 600 million won, while it is reduced to 400 million won for homes valued between 1.5 billion and 2.5 billion won, and to 200 million won for homes exceeding 2.5 billion won. This aims to curb speculative demand by lowering purchasing power for high-value properties.
Despite these regulations, housing prices in central Seoul and some areas of the metropolitan region have not significantly decreased. According to KB Real Estate, from June 2025 to May 2026, housing prices in Seoul rose by 8.59% during the first year of President Lee's term. Buyers with cash reserves, who are less affected by loan regulations, still have purchasing power, and in areas with rental instability and development expectations, sellers are withdrawing listings, limiting downward price pressure.
Historical data shows that housing prices cannot be solely explained by the intensity of regulations. An analysis by the Citizens' Coalition for Economic Justice found that during the Roh Moo-hyun administration, housing prices in Seoul increased by 80%, and during the Moon Jae-in administration, they rose by 119%. Both administrations implemented strong demand suppression measures, including comprehensive real estate taxes, increased capital gains taxes, loan regulations, and reconstruction regulations, yet demand and supply instability persisted in central Seoul.
Conversely, during the Lee Myung-bak administration, despite regulatory relaxations and supply expansion initiatives, housing prices in Seoul fell by 10% due to the global financial crisis, economic recession, and weakened buyer sentiment. Under the Park Geun-hye administration, a combination of relaxed lending and low-interest rates led to a 21% increase in housing prices in Seoul, while during the Yoon Suk-yeol administration, despite regulatory easing, high-interest rates and a transaction freeze limited price growth to just 1%.
Ultimately, the real estate market has proven to be more responsive to factors such as interest rates, liquidity, supply confidence, the rental market, and development expectations than to the direction of government policies. Even during periods of tightened regulations, low interest rates and significant supply concerns can lead to price increases, while during periods of relaxed regulations, high interest burdens and economic downturns can stifle buyer activity.
Seojin Hyung, a professor at Kwangwoon University, stated, "While regulations are implemented to stabilize prices, excessive demand adjustment can lead to adverse effects. Policies that suppress demand without ensuring supply can result in rising prices as a side effect." He emphasized the need for supply to be aligned with annual and regional demand forecasts to help stabilize prices.
* This article has been translated by AI.
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