"Didn't Know This Trick?" 84-Sq.-M. Mixed-Use Unit Sells for 2.14 Billion Won... Indirect Buying Demand Spreads [One Year of Land Transaction Permit Zones Across Seoul]

Workaround purchases of mixed-use buildings with small land shares
Premiums for suburban apartments in the unregulated auction market
Balloon effect spreads to non-apartment homes and Gyeonggi Province

As demand for indirect purchases aimed at circumventing the government’s owner-occupancy requirement and land transaction permit system spreads, balloon effects are emerging across the real estate market. While niche demand is flowing into mixed-use residential-commercial buildings that fall outside the regulatory thresholds, auctions—which are exempt from permit requirements—are seeing a string of cases in which apartments are won with bids above their appraised values. Buying demand is shifting to Seoul’s outer districts, Gyeonggi Province and the non-apartment market, driving a chain of price increases.

A property listing notice at a real estate agency in Seoul on the 1st. Yonhap News.

According to the real estate industry on October 11, current regulations, which determine whether a land transaction permit is required based on each household’s share of the site rather than the size of the home, are being used as a channel for circumventing restrictions. In high-rise mixed-use residential-commercial buildings, each household often owns 15 square meters or less of the total land, the threshold for commercial zones, allowing buyers to purchase units with tenants in place. In land transaction permit zones, a permit is required if a household’s share of the site exceeds 6 square meters in a residential zone. The thresholds are 15 square meters in commercial and industrial zones and 20 square meters in green zones. A household’s share of the site is its portion of the land owned by all households in the complex.

High-rise mixed-use residential-commercial buildings, packed closely together, have small land shares relative to the size of their homes. One example is Cheongnyangni Station Lotte Castle SKY-L65 in Seoul’s Dongdaemun District, which rises to 65 stories. An 84-square-meter unit in the complex has a land share of about 11.7 square meters. As this is below the 15-square-meter threshold for commercial zones, the unit is not subject to the owner-occupancy requirement under the land transaction permit system. On July 16, it changed hands for a record-high 2.14 billion won on the 43rd floor.

An 84-square-meter unit at nearby Cheongnyangni Station Hanyang Sujain Graciel also has a land share of about 11.8 square meters and is exempt from the permit requirement. A unit of this size sold for a record-high 1.9 billion won on July 9 this year, on the 34th floor. Regulations can differ within the same complex depending on the building and unit type. At Centras in Hawangsimni-dong, Seongdong District, some unit types in Buildings 127 to 130, among the complex’s 30 buildings, are exempt from the permit requirement because they are in a commercial zone. The land shares of 44- and 59-square-meter units are 15 square meters or less, allowing buyers to take over the existing jeonse deposits.

The auction market, which is entirely exempt from the land transaction permit system, is also considered a regulatory blind spot. The apartments with the highest winning bids relative to their appraised values were concentrated in Seoul’s outer districts. According to GG Auction, nine of the 10 Seoul apartments with the highest winning-bid-to-appraisal ratios last month were in Nowon, Dobong, Gangbuk and Seongbuk districts. Junggye Mujigae in Nowon District fetched 495.1 million won, 28.9% above its appraised value of 384 million won. Beondong Jugong Complex 1 in Gangbuk District also sold for 565.07 million won, exceeding its appraised value of 458 million won.

The balloon effect is spreading to non-apartment housing, including low-rise multi-unit buildings and row houses. From September 2025 through August 2026, a total of 49,988 transactions were recorded in Seoul for detached houses, multi-family houses, low-rise multi-unit buildings and row houses. That was a 23.88% increase from 40,353 transactions in the previous 12-month period.

Even though the government added 12 areas in Gyeonggi Province to the land transaction permit zones to contain the balloon effect, the measure has had little impact. During the same period, home prices in Bundang District, Seongnam, which includes the Bundang and Pangyo new towns, rose 22.66%, while neighboring Suji District in Yongin rose 19.08%. Prices in Gwangmyeong, where residents moved into large-scale redevelopment and reconstruction complexes, also surged 19.52%.

In particular, Dongtan District in Hwaseong, Gyeonggi Province, which comprises Dongtan New Towns 1 and 2, recorded a 17.59% increase in the first eight months of this year, according to separate statistics compiled since the district government system was launched, marking the steepest rise in home prices. At the end of June, the Ministry of Land, Infrastructure and Transport additionally designated three areas—including Dongtan, Giheung District in Yongin and Guri—as overheated speculation zones and adjustment target areas.

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