|Land Minister Kim Hyun-mee, right, speaks during the housing policy review committee session at the Sejong Government Complex, Wednesday. / Yonhap|
The government introduced a measure to cap presale prices of privately built apartments in 27 neighborhoods around Seoul, Wednesday, but experts remain skeptical of the efforts.
They even claimed the move could discourage demand for reconstruction to choke off the housing supply, eventually hiking housing prices in Seoul.
"The government believes the move is expected to help curb a rise in Seoul's housing prices by up to 20 percent, but I do not agree with the government's optimism," said a Lotte real estate agency broker surnamed Nam. Nam's agency is also located in Seocho-gu, one of the districts affected by the government measure.
"People want to live in Gangnam-gu or Seocho-gu no matter how expensive the area is. There will be less reconstruction due to the measure. This will choke off the new housing supply in the area. The measure will rather raise housing prices here."
On Nov. 6, the Ministry of Land, Infrastructure and Transport announced it has designated 27 Seoul neighborhoods located in five districts south of the river, including affluent Gangnam-gu and Seocho-gu, and three north of the river, as target areas to implement a "presale price cap system" for apartments to be built by private builders amid signs of escalating housing prices.
"Demand for new homes in Seoul has risen sharply due to record-low interest rates and ample liquidity in the markets. Presale prices of newly built apartments jumped by four times higher than those of existing homes," Land Minister Kim Hyun-mee said during the housing policy review committee session at the Sejong Government Complex, Wednesday.
"The government will be closely monitoring undesignated districts especially in metropolitan areas. It will additionally apply the system to areas that show any signs of volatility."
Mobile real estate app Zigbang's big data division head Ham Young-jin also claimed the effect will be temporary.
"The government introduced a similar measure across the country in 2007. This time, the measure is implemented only in 27 parts of Seoul. More people will rush to the 27 neighborhoods thanks to the lower presale prices there," He said.
"Housing prices in areas neighboring the 27 neighborhoods, such as Gwacheon, south of Seoul, could also surge in the short run. The impact could be different from the government's expectation."
According to the Korea Appraisal Board, Seoul's housing prices have continue their uptrend over the past two months. Despite the government's measure to cap the presale housing prices, Seoul apartment prices were up 0.8 percent in the first week of November.