President Lee Calls for Stabilization of Seoul Housing Market

President Lee Jae-myung recently described the housing market in Seoul as undergoing a "stabilization process," while real estate experts assessed that the current demand shifts are largely temporary due to regulations. They emphasized that both supply expansion and improvements in regional living conditions are essential for market stability.

During a press conference held at the Blue House on September 18, President Lee stated, "Recently, price declines have spread to areas including Gangnam, while outer regions are seeing increases. It seems that a kind of stabilization work is underway."

He identified the concentration of population in the metropolitan area as a fundamental cause of rising housing prices, along with the "myth of real estate invincibility" and a reduction in permits and construction since 2022, which has led to decreased supply. The government plans to quickly increase supply through land development, reconstruction, redevelopment, and urban maintenance, while also expanding financial support for these initiatives.

Experts, however, are skeptical about viewing the recent price adjustments in Gangnam and the increases in outer areas as a long-term stabilization trend. Professor Seo Jin-hyung from Kwangwoon University noted, "From today’s presidential press conference, it appears there has been no significant change in the perception of the real estate market," adding that the current policy direction is likely to continue.

He further stated, "The current phenomenon is a result of shifts in demand from the lower-income population, and it cannot be considered a stabilization process. Given the varying locations and living conditions, it is also inappropriate to aim for a uniform price stabilization across real estate."​

Kim Hyo-sun, a senior real estate expert at KB Kookmin Bank, pointed out, "Stabilization can mean that high prices converge to the average, or conversely, that lower prices rise. This year, the increase rate in mid-to-low price areas has been significantly higher."

There is uncertainty about whether this trend will continue even after regulatory relaxations. Kim warned, "When regulations are lifted, there is a possibility that prices will rise again," stressing that for complete stabilization, there must be a simultaneous homogenization of living conditions during the implementation of regulations. He added, "Since there are limits to policy-driven stabilization, a fundamental approach to reducing regional disparities in living conditions within Seoul is necessary."

Professor Kwon Dae-jung from Hansung University stated, "To prevent price increases, we need to increase supply rather than rely on regulations." He explained that the concentration of jobs and opportunities in the metropolitan area naturally attracts people.

Opinions have also emerged that the government's proposed solutions of supply expansion and financial support require further refinement. Kim noted, "If financing for suppliers is loosened, there could be side effects where loans are extended to projects that are not financially sound," emphasizing the need for careful evaluation of project viability when easing supplier loans.

Professor Seo expressed concerns about the limitations of simultaneously pursuing demand suppression and supply expansion. He remarked, "Housing supply ultimately needs to be supported by demand, making it difficult to expand supply while suppressing demand."