A year has passed since the gloomy 6·7 and 7·10 measures were implemented. If I had to pick just three of the most powerful measures among the 20 or so various regulatory measures since the inauguration of the Moon Jae in administration, they were the 8/2 measures at the beginning of the administration, the 6/17 measures and the 7/10 measures last year.
The main focus of the 6·17 measures were additional designation of regulated areas, designation of land transaction permission zones, housing mortgage loan regulations, strengthening safety diagnosis and (recently withdrawn) reconstruction membership requirements, and regulating housing speculation through corporations.
On the other hand, the July 10 measures are strengthening regulations through taxation. The key is to raise the property tax, which is still controversial over the scope of taxation, increase the heavy tax rate of the transfer tax for multi-family owners, increase the short term capital gains tax, increase the acquisition tax, abolish the rental business system, and apply the retroactive application of tax benefits to rental business owners.
Real estate policy that resulted in the exact opposite of government intentions
Through the 6/17 and 7/10 measures, it can be said that the government poured out all the regulations it could come up with. If so, let's find out whether these measures really worked in the market.
In conclusion, the result was the opposite of the government's intention. The rate of increase in apartment sales across the country, which stood at only 4.0% in the year just before the July 10 measures, soared by 18.1% in the one year immediately after the July 10 measures. The difference in the rate of increase is 14.1 percentage points.
In the Jeonse market, there is also a big difference in the rate of increase before and after the July 10 measures. The nationwide apartment jeonse price, which had stabilized at just 1.8% for the year just before the July 10 measures, has risen by a whopping 12.7% for one year after the July 10 measures, causing a jeonse crisis.
In the end, the July 10 measures aimed at stabilizing the trading market did not stabilize the trading market, but rather stimulated the jeonse market.
In the Seoul area, both apartment sales and jeonse prices increased after the July 10 measures, but there is a subtle difference from the national average. Although the 7·10 measures affected both the sale and jeonse markets, it can be said that the nationwide apartment market was more affected by the sale market, while the Seoul apartment market was more affected by the jeonse market.
Why is there such a difference? Seoul is a 100% regulated area, but the whole country is not quite mixed with unregulated areas.
Let's compare the difference in the rate of increase before and after the July 10 measures by dividing the metropolitan area and other provinces. According to KB Kookmin Bank’s classification, ‘other regions’ refer to Gangwon-do, Chungcheong-do, Jeolla-do, Gyeongsang-do, and Jeju-do.
However, the entire metropolitan area is regulated except for some outlying areas such as Icheon, Yeoju, Yeoncheon, Dongducheon, Gapyeong, and Yangpyeong. On the other hand, at the time of the July 10 measures, all regions except Cheongju, North Chungcheong were unregulated. Therefore, statistically, there is no significant difference in the metropolitan area as a regulated area and other areas as an unregulated area.
However, in the metropolitan area, which can be called a regulated area, the increase in apartment sales price is 16.3 percentage points, and the increase in Jeonse price is also 14.0 percentage points. In other provinces, which can be called unregulated areas, the increase in apartment sales price or jeonse price is 10.1 percentage points and 7.2 percentage points, respectively, which is not comparable to the metropolitan area.
This suggests two things. First, it means that the 6/10 measures or the 7/10 measures did not work well in the market. The fact that the rise in regulated regions was greater than that in non regulated regions means that regulations are not working in the market.
The second is that the reason why the increase in the rate of increase in the Jeonset price in Seoul exceeded the sale price is not because Seoul is a regulated area.
Why? This is because regulations that exist only in Seoul and not in other regulatory regions are being applied in the market. It is the designation of the land transaction permit zone. At the time of the 6/17 measures, three dongs including Daechi-dong, Samseong-dong, and Cheongdam-dong in Gangnam-gu and Jamsil-dong in Songpa-gu were grouped as land transaction permission zones.
Preemptive regulations were put in place so that major good news such as the construction of a global business center or the development of Yeongdong daero would not stimulate house prices in these areas. However, this measure was the only one that worked out of the various regulations of the 6/17 or 7/10 measures.
Fireballs splattered to the charter market trying to catch Daechi, Samsung, and Cheongdam
Comparing the average price per area by dong provided by KB Kookmin Bank, the average price of three dongs, Daechi-dong, Samsung-dong, and Cheongdam dong, increased by only 8.4% over the past year. This is lower than the average of 24.7% in Gangnam-gu and 21.5% in Seoul.
When Daechi-dong, Samseong-dong, and Cheongdam dong were grouped as regulated areas, a balloon effect appeared in the neighboring Apgujeong-dong, Dogok-dong, Yeoksam-dong, and Gaepo-dong.
The problem is that the sparks randomly bounced off the charter market. If you are tied to a land transaction permission zone, transactions by people who will not actually move in are restricted. In other words, anyone who wants to buy a house and rent it out cannot do business. On the other hand, since the seller has given a lease in some cases, the number of rental items in the market is gradually decreasing, but since they cannot supply any rentals at all, the price of jeonse has no choice but to rise.
Daechi-dong ranks first in Gangnam gu for average jeonset prices. However, the average selling price is in the second place. Samseong-dong and Cheongdam-dong show the same trend. Samseong-dong is an area with the fourth highest average jeonse prices in Gangnam-gu. However, the sales price ranking is only 5th. Cheongdam-dong has the fifth highest average jeonse price in Gangnam-gu. However, the sales price ranking is only 6th.
Jeonse prices are very strong in all areas permitted for land transaction, but this means that the sale price is relatively weak (compared to other areas in Gangnam-gu).
Contrary to the original intention, the longer the regulation continues, the more likely the jeonse market will be affected. Therefore, rather than indiscriminate regulations, it is desirable for the government to gradually ease regulations that can affect the rental market. This is because, if the surge in the trading market has become a social problem until now, it is necessary to prevent this surge from continuing to the jeonse market in the future.
