Seoul apartment prices rose 10.42% in the year after the October 15 lending curbs

In a land transaction permit zone, a buyer cannot purchase a home without intending to live in it ^[14]. That rules out buying a flat with the sitting tenant's jeonse deposit in place and renting it out ^[14]. Each tenanted flat an owner-occupier buys and moves into drops out of the rental pool ^[14]. Seoul had 20,331 apartment jeonse listings on the 10th against 23,192 a year earlier, according to the data provider Asil, or 2,861 fewer ^[12][19]. Seoul jeonse prices rose 9.96% in the year after the measures, about 4.1 times the 2.41% of the year before ^[10][20]. In Gyeonggi, lease prices rose 6.89%, up from 1.28%, slightly faster than sale prices there ^[11][4].

Sale prices give a more mixed verdict. The 15.12-point gap between Seongbuk-gu and Gangnam-gu shows the curbs held down the top of the market ^[2][21]. Or rather, they held it down while buyers moved to cheaper districts to get around the lending restrictions, as the Seoul Economic Daily describes it ^[3].

When the package was announced, officials saw little chance that demand would move to other areas, and that forecast proved wrong, the paper reported ^[7]. Gyeonggi's annual apartment gain went from 0.33% to 6.57%, roughly twenty times the earlier pace ^[4][22]. The government has responded by adding districts to the regulated list ^[6]. After the June 30 round, buyers moved one district further out ^[8]. Suwon's Kwonseon-gu has since nearly matched regulated Dongtan-gu's 5.61%, and over the full year its 11.89% beat Seoul's average by 1.47 points ^[9][23].

The next cut to rental supply has a deadline. Under the August tax overhaul, the capital gains breaks for purchased rental apartments in adjustment target areas apply in full only to sales made by the end of 2027 ^[15]. The government expects 68,000 Seoul units to come to market as a result ^[15]. For scale, 68,000 is about 3.3 times the jeonse listings Asil counts in Seoul, though a unit and a listing are not the same thing ^[24]. The paper says rental supply shrinks further if those flats go to owner-occupiers ^[15]. All of Seoul is a permit zone, so any buyer there must intend to live in the home ^[5][14].

Households are paying for the wait. One couple in their 30s, the Seoul Economic Daily reported, had 200 million won saved and held off on a 600 million won flat in Bundang because borrowing 400 million won looked too heavy ^[17]. A year later the same flat costs 1.2 billion won ^[17]. With the same savings, the loan they would need has gone from 400 million won to 1 billion won, 2.5 times as much ^[25]. "I should have bought a home even in the panic buying right after the Oct. 15 measures," said one of the pair, identified only as A ^[18].

Two readings cut against ours. The 12-month window opens in the third week of October, immediately after the measures, so the post-announcement buying A describes falls inside the 10.42% ^[1][18]. And a year of index data cannot show what prices would have done with no curbs at all. Gangnam's slow year is the best evidence that the curbs held something back ^[2]. We think the curbs moved demand to new districts more than they reduced it, while the residency rule shifted flats from the rental stock into owner occupation ^[14]. We would be wrong if Seoul jeonse listings climb back toward last year's 23,192 with the permit zones still in force ^[12].