Land ministry announces areas subject to price ceiling system

Big changes coming to South Korea's real estate market.The government has just revealed the districts where new price ceilings will be imposed to clamp down on rampant speculation.Our Hong Yoo with the details.The Ministry of Land, Infrastructure and Transport said on Wednesday that the newly-adjusted price ceiling system on privately-owned housing sites will be applied to 27 neighborhoods in Seoul. Most of these neighborhoods are in the four districts in the southeast of the city, as well as two neighborhoods in Yongsan-gu and one each in Mapo-gu, Seongdong-gu, and Yeongdeungpo-gu districts.For these areas, the price of homes has to be less than the appraised value of the housing added with the construction cost.This time, the system has been applied to pinpointed areas where the housing market is overheated instead of being applied to the entire country like has been the case in the past."Low interest rates and ample market liquidity have recently pushed up demand in the Seoul housing market amid growing economic uncertainties.The price of new apartments in Seoul has quadrupled over the past year, fueling a rise in the price of existing homes."The minister Kim Hyun-mee explained this is why the government has revised the price ceiling system to break the vicious cycle of rising house prices.The criteria for the price ceiling were districts that have witnessed a big price spike this year, Seoul districts that have contributed to overheating markets and have new housing developments planned, and districts that postponed releasing newly-built houses to the market to drive up prices.Experts say the government used a "two-track" strategy of clamping down on the overheated housing market with the price ceiling system, while lifting restrictions on areas where the housing market has been stagnant for a long time.Hong Yoo, Arirang News.