Seoul Mayor Oh Se-hoon and Gyeonggi Province Governor Choo Mi-ae called on the central government to review its land transaction permit system, pointing to side effects and the limits of its price-curbing power. Oh said sweeping designations and owner-occupancy requirements could deepen a shortage of rental housing and ultimately push up sale prices. Choo said her province has been urging the government to lift designations quickly where the policy has run its course.
Asked about the effectiveness of the permit system at a parliamentary audit of the Seoul Metropolitan Government by the National Assembly's Land, Infrastructure and Transport Committee on the 19th, Oh said the designations now cover all of Seoul including its outskirts, leaving the city with little room to adjust. "A decision will have to be made," he said.
He identified the mandatory owner-occupancy rule as the system's fundamental flaw. Requiring buyers to live in the homes they purchase keeps rental supply tight, he argued, which in turn can drive sale prices higher. Asked to press the central government for a change in policy, Oh said he would do so.
Choo raised the need to lift permit zone designations at a separate audit of Gyeonggi Province held the same day at the provincial government office. Responding to questions from People Power Party lawmakers Kim Eun-hye and Jung Hee-yong, she said her province has been telling the government that designations should be lifted quickly depending on policy results, except for long-term projects such as new town development.
"Designating land transaction permit zones does work to curb speculative demand, but I don't see it as effective in pushing down prices that have already risen," Choo said. "I can't go into specifics, but Gyeonggi Province has been making its case both formally and informally," she added. "We are continuously tracking conditions, monitoring trends and reporting on them."
Fifteen areas in Gyeonggi Province are currently designated as land transaction permit zones. Designations expire at the end of this year in 12 of them: the cities of Gwacheon, Gwangmyeong, Uiwang and Hanam; the Bundang, Sujeong and Jungwon districts of Seongnam; the Yeongtong, Jangan and Paldal districts of Suwon; the Dongan district of Anyang; and the Suji district of Yongin. Designations run through the end of next year in three others — the Giheung district of Yongin, the Dongtan district of Hwaseong, and Guri. All of Seoul is designated as a land transaction permit zone.
An analysis of weekly apartment sale price indexes from the Korea Real Estate Board showed that in 11 of the 12 Gyeonggi areas designated as permit zones under the Oct. 15 housing measures last year, apartment prices rose faster in the year after designation than in the year before.