Table of Contents
- The Paradox of Stronger Regulations, Prelude to an Unpredictable Market
- The 'Triple Shackles' on the Metropolitan Area, What Will Happen to the Flow of Funds?
- A Rise After 1211 Days, A Warning Already Started in the Market
- Conclusion: Between the Anticipation of 'House Price Increase Season 2' and Long-term Crisis
- Frequently Asked Questions (FAQ)
The Paradox of Stronger Regulations, Prelude to an Unpredictable Market
The real estate policy of the Lee Jae-myung government has finally been revealed. The 'Housing Market Stabilization Measures' announced on October 15, 2025, are considered stronger regulations that surpass those of the previous government, shocking the market significantly. Some experts interpret this as the beginning of 'Moon Jae-in house price increase season 2'.
It remains to be seen how these policies will change the future real estate market. There is considerable interest in whether the government's strong measures will actually contribute to stabilizing housing prices.
There are concerns that this measure, which heavily regulates the metropolitan area, will bring back the 'balloon effect' seen in the past. However, it is currently unpredictable how the strengthened regulations will affect the market. We are indeed in a very uncertain time.
The 'Triple Shackles' on the Metropolitan Area, What Will Happen to the Flow of Funds?
The recently announced 10.15 real estate measures have added 'land transaction permission zones' along with the adjusted areas and overheated speculation zones in major areas of Seoul and Gyeonggi. As a result, it has become effectively difficult to access the metropolitan area without securing funds. These strong regulations are expected to have a significant impact on the market.
In particular, the designation of land transaction permission zones, which imposes a residential occupancy obligation, effectively makes 'gap investment' impossible, blocking the flow of investment demand. In this context, market participants are noting that the situation is "more serious than during the Moon Jae-in government," and there is increasing speculation that super-strict regulations under the Lee Jae-myung government could recreate 'Moon Jae-in house price increase season 2' in non-metropolitan areas.
As the metropolitan market closes firmly, the large pool of liquidity that has nowhere to go is turning its gaze towards local metropolitan cities where regulations are less stringent. Busan, symbolic as the second city of South Korea with abundant capital, is considered an attractive refuge for investors, especially in prime areas like Haeundae, Suyeong-gu, and Dongnae-gu. Although the government may aim for stability in the metropolitan area, the outcome could likely lead to a significant balloon effect where capital evades regulations and floods into Busan. This trend is expected to greatly impact the future real estate market.
A Rise After 1211 Days, A Warning Already Started in the Market
The market had been reacting sensitively even before the policy announcement. The decline in Busan's apartment prices, which lasted for 3 years and 5 months, or 1211 days, has finally ended and has turned upward. According to data from the Korea Real Estate Agency, the average sales price of apartments in Busan rose by 0.03% in the second week of October, marking a dramatic change.
It is notable that traditional affluent areas like Suyeong-gu and Haeundae-gu have shown increases of 0.25% and 0.20% respectively. This is a result that reflects the effects of the 10.15 measures yet to be fully implemented, and there is strong analysis suggesting that if capital inflow continues, the increase could be even larger. This trend is expected to have a positive impact on the future real estate market.
Historically, past data supports the current outlook. There are cases where the local real estate market actually thrived during periods of severe regulation in the metropolitan area. As regulations in the metropolitan area are tightened, liquidity tends to flow into regions, leading to price increases—a pattern that is likely to repeat this time as well. This prediction is considered a reliable analysis based not just on speculation but on historical trends.
Conclusion: Between the Anticipation of 'House Price Increase Season 2' and Long-term Crisis
In conclusion, the real estate market in Busan is poised between the strong regulations of the Lee Jae-myung government and the anticipation of 'Moon Jae-in house price increase season 2'. However, there are also conflicting circumstances involving long-term weakening of urban fundamentals.
In the short term, it is highly likely that capital inflow from the metropolitan area will cause surges in prices in areas like Haeundae, Suyeong, and Dongnae. This trend may present clear opportunities for investors.
However, behind Busan's policy-induced boom are structural risks. Population decline and the lack of quality jobs pose significant threats to the long-term housing demand in Busan. Additionally, regulations on acquisition tax and capital gains tax still remain, which may hamper the sustainability of this boom.
While strong regulations are pressing the market, the volatility of capital remains unpredictable. The current market is truly in an unpredictable state.
Therefore, it is crucial for investors to analyze the sustainable growth prospects of the city closely rather than focusing solely on short-term gains. A cautious and wise approach is required at this point.
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Frequently Asked Questions (FAQ)
Q. What does Lee Jae-myung government's 10.15 real estate measures include?
The 10.15 measures introduced strong regulations by adding regulated areas, speculative overheated areas, and land transaction permission zones in the metropolitan area.
The Housing Market Stabilization Measures announced on October 15, 2025, will enforce unprecedentedly strong regulations in the metropolitan area, including designated regulated areas and speculative overheated areas in major areas of Seoul and Gyeonggi, along with the addition of land transaction permission zones. Particularly, the imposition of residential occupancy obligations in the land transaction permission zones effectively blocks investment demand like gap investment, significantly impacting market participants.
Q. What changes have occurred in the Busan real estate market after the 10.15 measures?
Busan apartment prices have turned upward after 1211 days, increasing investor interest.
Due to the regulations in the metropolitan area, a large pool of liquidity flowed into Busan, ending a 3-year and 5-month decline in apartment prices. Notably, prices have risen in traditional affluent areas like Haeundae-gu and Suyeong-gu, indicating positive signals in the Busan real estate market. This trend occurs before the full implementation of the government regulations, and as capital inflow spreads, price increases are expected to become even larger.
Q. What impact does the strong regulation in the metropolitan area have on the real estate market?
As regulations tighten in the metropolitan area, a balloon effect occurs as capital shifts to less-regulated local metropolitan cities.
Due to the enhanced regulations in the Seoul and Gyeonggi areas, it has become more difficult for investors to access these areas, causing liquidity to concentrate in local metropolitan cities like Busan, which have relatively weaker regulations. This balloon effect, which previously drove the activation of local real estate markets, is expected to repeat again in a similar manner, influencing the rise of housing prices in Busan.
Q. What are the long-term risk factors for the Busan real estate market?
Population decline, lack of quality jobs, and acquisition and capital gains tax regulations serve as long-term risks.
In the short term, there is a high expectation of price increases due to the inflow of capital from the metropolitan area, but the ongoing population decline and lack of sustainable quality jobs could reduce long-term housing demand in Busan. Moreover, the existing tax regulations such as acquisition tax and capital gains tax may hinder the sustainability of this real estate boom over the long term.
Q. What should investors be cautious about in the current real estate market?
Investors should not focus solely on short-term gains but should thoroughly analyze the city's growth potential.
Due to strong regulations and market volatility, the real estate market is in a difficult-to-predict state. Therefore, investors should carefully analyze the fundamentals, including population trends, economic structure, and job potential, rather than fixating on short-term price increases. A strategic approach that considers long-term growth potential is essential for wise investment.
