Govt places Seoul and nearby cities on special watch to rein in runaway home prices

2017.08.02 16:27:19 | 2017.08.02 16:28:10

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In an aim to cool the sizzling housing market, the South Korean government announced a fresh set of tougher actions Wednesday by labeling Seoul, Gyeonggi Province, Gwacheon and Sejong City as speculative zones requiring multiple scrutiny and restrictions in loans and trade.

The government’s move to designate overheated speculative areas for the first time in six years comes as part of efforts to stabilize soaring housing prices through clampdown on speculative transactions.

The government will also reduce mortgage loan limits and restrict resale of purchase rights of new apartments to prevent real estate speculation that has been spreading in the selected regions.

Under the latest measures, the loan-to-value (LTV) and debt-to-income (DTI) ratios in closely-watched regions will be toughened to 40 percent from July 3 - limiting home buyers from receiving loans that go over 40 percent of the property value and as well as of their annual income. The lending rules will be applied to all housing types and regardless of loan amount.

Kim Dong-yeon이미지 확대

Kim Dong-yeon

The measures also include having home buyers to share their financing and moving-in plans when they purchase a property that is valued at 300 million won ($267,141) or more in the specially-designated areas. They will also be subject to the country’s real estate transacting reporting system that verifies actual addressees and later evasion of taxes such as gift tax.

Kim Dong-yeon, deputy prime minister and finance minister, said in a meeting on Wednesday that the government will closely monitor overall market conditions and introduce additional measures if necessary.

By Cho Si-young

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