Table of Contents
- New Real Estate Policy: Two Pillars of Supply Expansion and Demand Management
- 1.35 million units supplied in the metropolitan area: Special supply measures based on construction starts
- Strengthened demand management: Reduction of LTV and expansion of land transaction permission zones
- Enhancing transaction transparency and strengthening market supervision
- Summary and Market Outlook: Supply signals and restructuring centered on end-users
- Frequently Asked Questions (FAQ)
New Real Estate Policy: Two Pillars of Supply Expansion and Demand Management
On September 7, 2025, the government announced the "Housing Supply Expansion Plan" to promote stability in the real estate market.
This policy aims for fundamental stabilization of the housing market, focusing on large-scale housing supply in the metropolitan area while simultaneously establishing strong demand management measures to suppress speculative demand.
These two elements are the core of the policy.
The newly launched government has stated that instead of past licensing standards, it will manage supply targets through construction standards that help citizens actually reside. This aims to enhance confidence in the feasibility of the policy.
I will analyze the potential impact of this announcement on the future real estate market, focusing on key points.
Summary of the Government's Real Estate Measures on September 7
The government aims to supply 1.35 million units in the metropolitan area by 2030 based on 'construction' standards, while LH will directly develop public land to accelerate the supply pace.
In conjunction with this, to prevent speculative demand, the LTV in regulated areas will be reduced to 40%, and strong demand management policies such as banning loans for housing rental business operators will be implemented.
Furthermore, the Minister of Land, Infrastructure, and Transport will be able to directly designate land transaction permission zones, and a dedicated organization for illegal real estate activities will be established to significantly strengthen market supervision.
1.35 Million Units Supplied in the Metropolitan Area: Special Supply Measures Based on Construction Starts
The most important element in the recently announced government measures on September 7 is supply expansion. The government plans to commence the construction of 1.35 million new homes in the metropolitan area, including Seoul, by 2030.
This corresponds to an average of 270,000 units per year, which is 1.7 times more than the supply performance of the past three years. This expansion of supply is expected to contribute to stabilizing the housing market.
The government plans to greatly expand the public role to speed up housing supply and strengthen implementation. First, LH (Korea Land and Housing Corporation) will promote housing construction directly without selling public land to the private sector to improve supply speed. This is expected to add about 60,000 units to the housing supply.
Additionally, aging public rental housing located near train stations will be reconstructed at a maximum floor area ratio of 500%. Along with this, the plan to utilize urban idle land such as long-unused school sites and aging public government offices to supply quality housing is set.
Minister of Land, Infrastructure, and Transport Kim Yoon-deok emphasized the following.
"For the fundamental stability of the housing market, it is essential to supply sufficient housing.
We will ensure that citizens continuously have confidence in housing supply,
and strive to establish a market structure where supplied housing can be fairly delivered to end users."
As a measure to increase supply, there is a plan to revitalize maintenance projects in the first new town and streamline private redevelopment and reconstruction processes. These measures are expected to help resolve supply shortages in areas with high residential preferences in urban centers.
Strengthened Demand Management: Reduction of LTV and Expansion of Land Transaction Permission Zones
The government has prepared various demand management measures to suppress speculative demand along with its large-scale housing supply plan. Among them, the most notable measure is the strengthening of loan regulations.
The upper limit of the LTV (Loan-to-Value ratio) for housing mortgage loans in regulated areas will be reduced from the existing 50% to 40%. This will also be equally applied to end-users, making it more challenging for them to secure funds for purchasing homes.
Moreover, the jeonse loan limit for single-home owners in the metropolitan area and regulated regions will be fixed at 200 million won, while new mortgage loans for housing purchase and rental business operators seeking to buy additional properties in the metropolitan area and regulated regions will be virtually banned. This measure, which effectively sets the LTV to zero, is evaluated as a strong measure that fundamentally blocks additional purchases by multi-home owners.
These measures reflect the government's determination to enhance stability in the housing market and curb speculative demand.
An important change to prevent overheating in the real estate market is the expansion of the authority to designate land transaction permission zones. Previously, this authority rested solely with the city and provincial governors, but now the Minister of Land, Infrastructure, and Transport can directly set land transaction permission zones in areas with potential for speculation.
This measure allows the government to respond more quickly and effectively to signs of market overheating, establishing an institutional foundation for better regulation.
Enhancing Transaction Transparency and Strengthening Market Supervision
This policy focuses on establishing order in real estate transactions. The government plans to collaborate with the Ministry of Land, Infrastructure and Transport, the Financial Services Commission, the National Tax Service, and the National Police Agency to establish an organization dedicated to investigating and prosecuting illegal real estate activities. This will significantly enhance market supervision capabilities.
For high-priced housing transactions and suspicious transactions involving corporate funds, the Ministry of Land, Infrastructure and Transport is conducting planned investigations, while the National Tax Service is focusing on tax audits. These measures aim to clearly require the source of funds in real estate transactions to enhance transparency.
This effort reflects the government's strong will to preemptively prevent speculation due to abnormal capital flows and thoroughly eradicate illegal and improper activities in the real estate market. This is regarded as a crucial measure to create a fairer real estate transaction environment.
Summary and Market Outlook: Supply Signals and Restructuring Centered on End-Users
The government's real estate measures on September 7 have two distinct directions: 'unprecedented supply expansion' and 'strong demand suppression'.
By setting a concrete construction target of 1.35 million units in the metropolitan area, it sends a long-term signal of supply stability to the market. At the same time, through the strengthening of the LTV and the expansion of the authority to designate land transaction permission zones, there is an intention to suppress short-term speculative demand.
If these measures are successfully implemented, the market is likely to undergo short-term volatility before restructuring around end-users. Therefore, it is expected to find a stable path ahead.
However, there are concerns that the intensified loan regulations may make it even more difficult for end-users with insufficient funding abilities to secure home ownership.
It is a critical time to closely monitor the government's follow-up actions and the market's responses.
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Frequently Asked Questions (FAQ)
Q. What are the main goals of the government’s real estate measures on September 7?
The aim is to supply large-scale housing focused on the metropolitan area and suppress speculative demand.
The government’s real estate measures on September 7 are composed of two pillars: supplying large-scale housing in the metropolitan area to ensure fundamental stability in the housing market while strongly suppressing speculative demand. This aims to facilitate a market restructuring centered on end-users.
Q. How does the government plan to expand housing supply?
Focusing on supplying 1.35 million units in the metropolitan area based on construction starts and strengthening implementation of public reconstruction.
The government will manage supply targets based on construction standards that assist citizens in actual residency instead of approvals. By 2030, it plans to commence construction of 1.35 million units in the metropolitan area, with LH directly engaged in housing construction and high-density reconstruction of public rentals in transit zones while utilizing idle urban land.
Q. What loan regulations have been strengthened for demand management?
The LTV for housing mortgage loans in regulated areas will be lowered from 50% to 40%.
The government has strengthened the Loan-to-Value (LTV) ratio from the existing 50% to 40% for housing mortgage loans in regulated areas to curb speculation. The limit for jeonse loans for single-home owners will also be unified to 200 million won, and new loans for multi-home owners and rental business operators seeking additional purchases will be virtually prohibited in the metropolitan area. This measure makes financing more difficult, effectively blocking speculative demand.
Q. How has the authority to designate land transaction permission zones changed?
The Minister of Land, Infrastructure and Transport now has the authority to designate land transaction permission zones.
Previously, only city and provincial governors could designate land transaction permission zones. However, under the new measures, the Minister of Land, Infrastructure, and Transport can now designate these in areas at risk of speculation, enabling quick responses to market overheating. This system supports the stabilization of the real estate market.
Q. What are the government’s measures to strengthen supervision in the real estate market?
An organization for investigating and prosecuting illegal activities will be established in cooperation with relevant authorities.
The government will form an organization focused on investigating and prosecuting illegal real estate activities in cooperation with the Ministry of Land, Infrastructure and Transport, the Financial Services Commission, the National Tax Service, and the National Police Agency, significantly enhancing market supervision functions. It will focus on investigating high-priced housing transactions and suspicious transactions involving corporate funds, aiming to increase transparency and eradicate illegal practices.