Lee Jae-myung’s Housing Crackdown Sparks Outcry

Concerns are growing regarding the Lee Jae-myung administration’s latest real estate policy, known as the “October 15th Measures.” This policy expands strict loan and tax regulations—previously limited to Seoul’s Gangnam Three Districts and Yongsan—to cover all of Seoul and 12 regions in Gyeonggi Province. The population in these areas exceeds approximately 13 million, making this a significant shift in real estate regulation.

Experts describe the measures as a de facto “transaction control.” Once an area is designated as regulated, loan limits drop sharply, making it nearly impossible for buyers without substantial cash reserves to purchase homes. Previously, buyers outside Gangnam and Yongsan could secure loans covering up to 70% of a home’s value (up to 600 million Korean won). Now, such financing is nearly unattainable.

Another key aspect of the policy is the designation of land transaction permit zones, which impose an “actual residency obligation.” This blocks the “homeownership ladder” that many 30s and 40s individuals used to buy homes with jeonse deposits (gap investments) and move in later after saving. As a result, all housing demand lacking cash liquidity is being pushed out of the market. There are also fears that the policy will act as a “jeonse supply ban,” as the channel for purchasing homes with jeonse deposits and supplying rental units is now completely blocked, potentially drying up jeonse listings.

While the side effects are clear, analysts argue that the policy’s goal of “suppressing home prices” may not succeed due to a lack of follow-up supply measures. Financial firms like Nomura and Citigroup have highlighted structural issues, noting that the absence of effective housing supply policies will likely lead to continued price increases. They suggest that while short-term stabilization may occur, home prices in Seoul will remain high due to structural factors.

◇Same Regulations for Gangnam or Suwon… “Cash-Rich Elite’s Gangnam Concentration Will Accelerate”

Experts warn that the policy will solidify a “cash-rich elite’s market” and worsen rental burdens for vulnerable residents. The ultra-strong measures, intended to differentiate from former President Moon Jae-in’s nearly 30 ineffective policies, are instead accelerating a “Moon Jae-in government season 2,” critics say.

Professor Lee Chang-mu of Hanyang University stated, “All-encompassing regulations without an exit will bring the capital region’s real estate market to a standstill. Since Suwon and Gwangmyeong in Gyeonggi now face the same regulations as Gangnam and Yongsan, the paradoxical concentration of cash-rich elites in Gangnam will deepen.”

◇Government Overlooks Supply, Mulls Tax Hikes

Instead of boosting private housing supply, the government is considering tax increases. Lee Sang-kyung, First Vice Minister of the Ministry of Land, Infrastructure and Transport, mentioned on a radio program that tax reforms—including holding taxes—must occur to redirect funds from real estate to productive sectors. Koo Yun-cheol, Minister of Economy and Finance, and Kim Yong-beom, Presidential Policy Office Chief, also hinted at de facto tax hikes using terms like “tax rationalization” or “normalization.” Despite President Lee Jae-myung’s campaign pledge to “not control home prices through taxes,” the administration reversed course within six months of taking office.

Professor Jung Soo-yeon of Jeju National University warned, “Higher holding taxes will force landlords to raise rents to offset costs, ultimately burdening tenants—the housing-vulnerable.” Former President Moon Jae-in’s government faced similar issues when the comprehensive real estate tax burden shifted to tenants, spiking jeonse prices. In 2020, the “Two Lease Laws” capped rent increases at 5%, but this inadvertently reduced jeonse listings, fueling further price surges.

Professor Son Jae-young of Konkuk University lamented, “It’s regrettable to repeat policies that already failed under the previous administration. Regulations targeting a tiny elite will ultimately worsen pain for vulnerable tenants and ordinary citizens.”

◇Sudden Regulations Cause Market Chaos, Side Effects Proliferate

Just one day after the policy’s announcement, market disruptions and confusion erupted. The designation of all Seoul as a “speculative overheating zone” caused chaos in redevelopment complexes. The issue involves those who began transactions before the regulations took effect. A notable example is Mok-dong, a redevelopment-heavy area previously under land transaction permit rules.

Mr. A, 38, a Mok-dong resident planning to move to Jamsil, signed a sales agreement for his current home and paid a 300 million Korean won deposit for a new property earlier this month. However, Yangcheon-gu’s designation as a speculative overheating zone on the 16th jeopardized the deal. Mr. A applied for a permit, but the transfer of redevelopment union membership—now prohibited—invalidated the preliminary agreement. Similar cases surged, prompting over a dozen Mok-dong real estate agents to protest at the district office on the 15th.

Mok-dong redevelopment union members argue, “Preliminary agreements signed before the designation should be exempt.” However, Yangcheon-gu Office stated, “We await Ministry of Land, Infrastructure and Transport guidelines,” while the ministry responded, “We are reviewing complaints.” Similar issues arose in Yeouido, with inquiries flooding district offices. The government faces criticism for neglecting administrative paralysis and chaos.

Experts also oppose the regulation banning union membership transfers. Yang Ji-young, head of Shinhan Securities’ Residential Real Estate Team, said, “Allowing free sales enables redevelopment combinations to form around willing participants, speeding up projects. Excessive regulations blocking exits will ultimately harm housing supply in Seoul’s urban core.”

The government claimed the policy introduced “ultra-wide regulations to block balloon effects.” However, loopholes already exist. Real estate firms cite Dongtan New City in Hwaseong, Songdo in Incheon, Guri, Gwangju, and Anyang Manan-gu—excluded from regulations—as “beneficiary regions.” A Dongtan agent noted, “Inquiries about gap investments in the 400–500 million Korean won range are pouring in nationwide.”

Popular areas may see transaction surges until the 19th, as buyers rush to complete deals before land transaction permit zones take effect on the 20th. Some describe it as a “five-day market frenzy.” A real estate agent in Seoul’s Seongdong-gu said, “Since the 15th, gap investment inquiries for new apartments have spiked. Previously, sellers raised prices by 100 million Korean won during viewings, but now they’re cutting prices to sell quickly—chased by regulations.”

☞Regulated Areas

Package regulations applied to areas with overheated prices or speculative risks. The three tiers—adjustment target zones, speculative overheating zones, and speculation zones—impose over ten regulations across loans, taxes, subscriptions, and redevelopment.

☞Land Transaction Permit Zones

Zones designated by metropolitan mayors or the Ministry of Land, Infrastructure and Transport to prevent speculation. Purchasers must obtain district office approval and reside for two years, effectively banning gap investments.