"We Do Not Intervene in Home Purchases with Own Assets... Excessive Borrowing Will Be Controlled"

Ministry Briefs on Additional Regulated Zones
"Bank Financing Ratio of 30-40% Deemed Excessive"

On June 30, the government designated certain areas in the Seoul metropolitan region—including Dongtan District in Hwaseong, Giheung District in Yongin, and Guri City—as "speculative overheating zones" and "adjustment target areas." Starting the very next day, July 1, these areas will be subject to strict regulations, including lending and tax restrictions. They have also been designated as Land Transaction Permission Zones (LTPZ), with the designation taking effect on July 5 after a five-day public notice period. Going forward, gap investments involving existing tenants will no longer be permitted.

Previously, triple regulations were only imposed on all of Seoul and some adjacent areas of Gyeonggi Province. The government determined that excessive speculative demand was being concentrated in regions not subject to such restrictions and therefore expanded the regulated areas. The authorities cited special factors in the semiconductor industry driving asset increases and development prospects such as the opening of the GTX-A metropolitan express rail line as reasons for the sharp rise in housing prices.

An official from the Ministry of Land, Infrastructure and Transport explained to reporters that, "We took into comprehensive consideration factors such as high transaction volumes and price increases, as well as various market indicators like the proportion of gap investments and the ratio of transactions by non-local buyers, to assess current market conditions."

Apartment complexes near Dongtan Station in Hwaseong City, Gyeonggi Province on the 30th. Photo by Yonhap News

The government also stated that one of the indicators considered in designating additional regulated areas was the proportion of external borrowing for home purchases. While it is common to use loans or tenant deposits to finance home purchases, the government views such leverage as excessive if it exceeds certain thresholds, increasing the likelihood that these areas will be designated as regulated zones in the future.

A Ministry of Land official added, "The government cannot intervene or control home purchases made entirely with personal assets. However, we believe that curbing speculative demand generated by leveraged purchases—those relying on loans—will help stabilize the market."

According to data compiled by Assemblyman Lee Jongwook of the People Power Party, over the past three months (March to May 2026), the proportion of home transactions in Dongtan District financed by loans from financial institutions was approximately 33.7%. Gap investments using tenant deposits accounted for about 8.0%. In Guri City, loans made up 30.8% of home transaction amounts, and tenant deposits accounted for 11.7%. In Giheung District, the loan ratio was 29.2%, while tenant deposits made up about 11.5%.

Given this context, there is a possibility that some areas adjacent to Seoul may be designated as regulated areas in the future. In Manan District of Anyang, the proportion of financial institution borrowing is 32.6%, and tenant deposits account for 12.3%, both relatively high. Similarly, in Namyangju, which includes Dasan New Town and is mentioned as a potential area experiencing a spillover effect, loans account for 27.3% and tenant deposits for 13.0%. In Byeongjeom District of Hwaseong, which borders Dongtan, the loan ratio is 37.0%, and tenant deposits make up 5.4%.

However, these regions have relatively low or modest levels of other indicators, such as transaction volume, housing price growth rates, or the proportion of investments by non-local buyers. One of the quantitative criteria the government uses to determine whether to designate an area as regulated is when the housing price increase rate exceeds 1.3 times the inflation rate.

On the 30th, an advertisement for the sale of a multi-unit building was posted near Dongtan Station in Hwaseong City, Gyeonggi Province. Yonhap News Agency

While Dongtan, Giheung, and Guri have been designated as triple-regulated areas (speculative overheating zone, adjustment target area, and LTPZ), it remains unclear whether this approach will be applied to additional areas in the future. Broadly speaking, speculative overheating zones impose restrictions on lending and home subscriptions, while adjustment target areas add stricter tax regulations. LTPZs require actual occupancy. If the Real Estate Transaction Reporting Act is amended in the future, the Minister of Land, Infrastructure and Transport will be able to directly designate LTPZs for individual regions, making the designation of triple-regulated areas more common going forward.

A Ministry of Land official commented, "Regulated areas (speculative overheating and adjustment target areas) limit home purchases through borrowing and tax regulations, while LTPZs curb speculative demand through gap investments. Although we must consider transaction patterns and market conditions, we believe these measures complement each other by restricting the inflow of speculative funds."

This content was produced with the assistance of AI translation services.