The South Korean government on Thursday announced a set of measures aimed at curbing real estate speculation that include an extended ban on the transfer of home purchasing rights in certain areas.
The measures follow a recent surge in home prices especially in the four most well-off districts in Seoul.
In the first 10 months of the year, prices of apartments in Gangnam district gained an average 5.77 percent while apartment prices in the entire nation only added 0.5 percent on average, according to the Ministry of Land, Infrastructure and Transport.
Apartments in Gangnam (Yonhap)
Apartment prices in Seocho also spiked an average 3.56 percent over the cited period, while prices in the eastern Gangdong district advanced 2.90 percent.
The ministry blamed speculation for such a sharp increase in prices, noting the number of purchasing right transfers topped
42,000 in the capital region over the January-September period, compared with 24,000 over the same period last year.
Apartment purchasing rights exist mainly because the government allows developers or builders to sell such rights before they even begin the construction of the apartments to be owned as a way of raising necessary funds.
Sales of such rights often allow investors or speculators to make a profit over a short period of time as the initial price of new apartments are usually fixed significantly lower than market prices, and with only a fraction of money required to actually purchase a new apartment because purchasing rights usually require less than 5 percent of the entire price.
Effective immediately, those who purchase a new apartment in Seoul and six areas in the surrounding Gyeonggi Province will be required to pay 10 percent instead of 5 percent of the apartment price as a down payment, the ministry said.
Also, transfer of purchasing rights will be virtually prohibited in the four Seoul districts, including Songpa, that are deemed most prone to speculation.
"The government will continue to closely monitor the market after these measures are implemented, and take additional measures if necessary," said Finance Minister Yoo Il-ho, who is double hatted as deputy prime minister. (Yonhap)