Escalating property values constrain Bank of Korea's ability to adjust interest rates.
In the heart of southern Seoul, the Songpa District remains a coveted residential area, with apartment prices continuing to soar amidst a broader Seoul apartment market upswing. According to recent data, Seoul apartment prices have risen for 20 consecutive weeks, with weekly gains reaching their steepest increase in nearly seven years.
The average apartment price in Seoul reached approximately 1.177 billion won in May 2025, significantly above the 860 million won loan limit threshold, impacting mortgage availability, particularly in affluent districts like Songpa. This high pricing is leading to transactional slowdowns predicted in upscale areas like Songpa, as affordability wanes for younger buyers and those without substantial cash reserves.
To address housing instability and overheating in Seoul’s asset markets, including Songpa, the government has implemented a series of measures. These measures focus on regulatory controls and supply-side initiatives.
One such measure is the reintroduction of Land Transaction Permit Zones in premium districts, including Songpa. Buyers are now required to obtain permission from local councils before purchasing apartments, with the condition that the property will be their primary residence. Although these controls initially caused price drops of up to 7.7%, they also led to unintended consequences such as increased rents and price hikes just outside regulated zones.
On the supply front, the government plans to deliver 236,000 new housing units by 2029, emphasising new towns around Seoul to ease pressure and improve affordability, particularly for first-time buyers.
Lending policies have remained cautious despite a Bank of Korea base rate cut to 2.75%. Loan-to-value restrictions are maintained in speculative hotspots, including Songpa, and banks rigorously screen borrowers due to rapid household debt growth recorded in 2024.
Recent data from early July 2025 suggest that after a period of heightened "panic buying," the Seoul real estate market, including Songpa, is starting to cool down rapidly, signalling some effectiveness of government intervention in stabilizing the market.
As of July 1, 2025, house listings posted by a real estate agency in Seoul provide insight into the impact of housing instability and real estate regulations. However, they do not indicate any specific changes to the 600 million won mortgage cap implemented by President Lee as part of his first real estate clampdown.
The JoongAng Ilbo reported on the house listings on July 1, 2025, but the listings do not reveal any new mixed signals from the presidential office regarding housing loan regulations, nor do they suggest any changes in the commercial bank's loan services or a slowdown in real estate speculation.
Despite these regulatory measures and cooling pressures, Songpa District's housing market continues to be characterised by high prices and strong demand. The future of Seoul's overheated property sector remains a topic of ongoing concern and discussion.
- The government's focus on regulatory controls and supply-side initiatives, such as Land Transaction Permit Zones in premium districts like Songpa, is aimed at addressing housing instability and market overheating in Seoul, including the real estate market.
- The government's plan to deliver 236,000 new housing units by 2029, particularly in new towns around Seoul, is an attempt to ease pressure on the property market and improve affordability, particularly for first-time buyers.
- Lending policies in Seoul remain cautious despite the Bank of Korea base rate cut, with loan-to-value restrictions in speculative hotspots like Songpa and banks rigorously screening borrowers due to rapid household debt growth.
- Despite the implementation of various government measures and cooling pressures, the Songpa District's housing market continues to be characterized by high prices and strong demand, making it a focus of ongoing concern and discussion in the realm of business, finance, and the economy.
