▲ AI PRISM* Personalized Economic Briefing
* Editor's note: AI PRISM (Personalized Report & Insight Summarizing Media) is an artificial intelligence-based personalized news recommendation and summary service developed with support from the Korea Press Foundation. It selects and provides six tailored news items for each reader type.
[Key Issue Briefing]
■ Central and local governments split on home price outlook: Seoul Mayor Oh Se-hoon forecast that home prices in outer Seoul are likely to trend higher from late this year through early next year. He attributed the view to a rental squeeze stimulating purchases by owner-occupier buyers, as jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent) supply in the northeastern and southwestern districts has plunged 70-80%. That stance runs directly counter to the Ministry of Land, Infrastructure and Transport and Korea Land & Housing Corporation, which expect price gains to moderate.
■ Debate intensifies over side effects of land transaction permit system: Oh and Gyeonggi Province Governor Choo Mi-ae both pointed to the limits of the land transaction permit system in curbing prices and called on the central government to review it. In 11 of the 12 permit zones in Gyeonggi Province, apartment price growth after designation was found to have accelerated from the preceding year, drawing market attention to what happens in areas where designations expire within the year.
■ Chip bonuses accelerate trading up: From January to September, the number of buyers from Yeongtong, Giheung and Hwaseong purchasing units in multi-unit (condominium) buildings in Bundang and Songpa jumped 25.1% from a year earlier. Special performance bonuses at Samsung Electronics' device solutions division and in-house loans of up to 500 million won for employees who do not own a home have lifted purchasing power, fueling demand to trade up to higher-tier neighborhoods, centered on apartments near shuttle bus routes.
[News of Interest to Real Estate Investors]
1. Oh Se-hoon: Home Prices to Trend Higher Through Early Next Year
Key points: Seoul Mayor Oh Se-hoon said on the 19th at a National Assembly Land, Infrastructure and Transport Committee audit of the Seoul city government that home prices in Seoul are likely to trend higher from late this year through early next year. "Jeonse supply in Seoul has been depleted and rents are rising," he said, noting that panic buying, with even buyers who had no particular need to purchase joining in, is pushing up prices on the city's outskirts. On the government's focus on owner-occupancy, he said, "Another name for multiple-home owners is private rental business operators," urging a policy shift to ease the rental crunch. Land Minister Hong Ji-sun, by contrast, said prices in the three Gangnam districts and Yongsan had turned lower and projected that gains would narrow through the end of the year, underscoring the gap between the central and local governments.
2. Oh Se-hoon and Choo Mi-ae Both Push Back on Permit System
Key points: Seoul Mayor Oh Se-hoon and Gyeonggi Province Governor Choo Mi-ae questioned the effectiveness of the land transaction permit system at parliamentary audits held the same day and called on the central government to review the policy. Oh warned that owner-occupancy requirements could deepen the rental crunch and end up pushing sale prices higher, stressing that "a decision is needed." Choo said, "It works to curb speculation, but it does not work to push down prices that have already risen," adding that she is asking the central government to lift designations promptly in line with policy results. In 11 of the 12 permit zones in Gyeonggi Province, apartment price growth after designation was found to have accelerated from the preceding year, focusing attention on whether the 12 zones whose designations expire at the end of this year will be extended.
3. Purchases in Bundang and Songpa From Chip Belt Surge 25%
Key points: From January to September, 1,354 buyers of units in multi-unit (condominium) buildings in Bundang and Songpa districts were residents of Yeongtong, Giheung and Hwaseong, up 25.1% from 1,082 a year earlier. That is more than 10 times the 2.3% increase in total buyers in Bundang and Songpa over the same period, and for Hwaseong residents alone the combined figure for the two districts jumped 41.8%. Purchasing power has been underpinned as Samsung Electronics set aside 10.5% of its device solutions division's business results as special performance bonuses and, starting in September, began offering loans of up to 500 million won at an annual rate of 1.5% to employees who do not own a home. A 117-square-meter unit at Pangyo Prugio Grand Blue rose 730 million won, from 3.45 billion won in September last year to 4.18 billion won in May this year.
[Reference News for Real Estate Investors]
4. Lee Draws a Line on Easing Lending Rules
Key points: President Lee Jae-myung signaled opposition to easing lending rules at a tea meeting with reporters on the 19th, saying interest payments could rise at least 2 to 2.5 times when five-year fixed-rate mortgages reach maturity. He cited a supply shortage stemming from a halving of permits and construction starts in 2022 as the main cause of the surge in home prices, and projected "normalization after 2028." Rebutting the argument that the government is using taxes to rein in prices, he said, "That is not true at all. This is about tax justice."
5. Oh Se-hoon Says Land Ministry Should Pay for GTX Delay
Key points: Seoul Mayor Oh Se-hoon said at the audit that over the delayed decision on reinforcement methods for Samseong Station on the GTX-A line, "the Land Ministry, which deliberately delayed the decision, should bear liability for damages." The city asked between July and September for a prompt decision on the reinforcement method and for trains to pass through without stopping, but the ministry extended its joint inspection period by four months and said it would finalize the matter in December. With non-stop passage pushed past August, operator SG Rail is incurring damages running into hundreds of millions of won a day, fueling arguments that the ministry is responsible.
6. 1.3 Trillion Won Daejeon Station Project at Risk of Going Back to Square One After 18 Years
Key points: The Hanwha Engineering & Construction consortium handling the Daejeon station area mixed-use development project, with total project costs of 1.3 trillion won, failed to pay the 900 million won balance after six extensions of the deadline. Korail plans to notify the consortium of contract termination on the 20th, raising the likelihood that the project, adrift for 18 years since a basic plan was drawn up in 2008, will return to square one. The failure reflects a combination of a worsening construction market, soaring building costs and higher project financing costs, and securing a successor developer is expected to prove difficult even after conditions were already eased to improve profitability, including a larger share of residential facilities.
