Immediate Impact: Sales and Inquiries Stalled in Gangnam and Yongsan

The expansion of Land transaction Permit Zones (LTPZ), locally known as ‘Toheje’, to include the Gangnam 3-gu districts (Gangnam, Seocho, and Songpa) and Yongsan-gu has triggered an immediate cooling effect on the Seoul real estate market. Real estate agencies report a significant drop in both sales and buyer inquiries on the first day of the new regulations.

One brokerage firm in Jamsil-dong, Songpa-gu, noted a distinct shift in market sentiment. Those looking for quick profits thru gap investments or those rushing to sell before the LTPZ took effect largely concluded their transactions last week. Now, both buyers and sellers appear to be adopting a wait-and-see approach.

This sentiment is echoed across the affected districts. An agent in Yeoksam-dong, Gangnam-gu, observed that while some investors are exploring charter investments, landlords are hesitant to sell unless they receive their desired price. Similarly, a Banpo-dong, Seocho-gu, agency reported a standstill in inquiries after a flurry of activity the previous week.

I can’t buy an apartment with a charter, so I think it will reduce the deal and slow the price.

– Real Estate Broker in Yongsan-gu

The LTPZ requires individuals purchasing property in designated areas to reside there, effectively curbing speculative investments.This measure aims to stabilize housing prices in these highly sought-after districts. the impact is already visible, with some buyers managing to negotiate price reductions before the LTPZ implementation.

One recent buyer, identified only as “B,” secured an 84㎡ apartment in Songpa-gu for approximately ₩50 million less than pre-declaration prices. This suggests that the regulations are beginning to temper the previously overheated market.

The “Balloon Effect”: Anticipation Builds in Neighboring Districts

While Gangnam and Yongsan grapple with the new regulations, neighboring areas like Mapo-gu, Seongdong-gu, and Gwacheon are experiencing a surge in interest. This phenomenon, known as the “balloon effect,” occurs when regulations in one area divert investment to less regulated adjacent areas.

The expectation is that demand, notably from investors seeking gap investments, will shift towards these areas.However, weather this increased interest will translate into actual transactions remains to be seen, as sellers are keenly aware of the potential price increases and may be reluctant to sell.

One agency in Seongdong-gu reported a recent sale where the price increased by ₩100 million in a single week, reaching ₩1.8 billion. In Mapo-gu,agents noted that landlords are holding back listings,anticipating further price thankfulness. Similarly, a Gwacheon brokerage expressed optimism that gap investment consumers, deterred by the restrictions in Gangnam and Yongsan, will turn their attention to their district.

Expert Analysis and Market Outlook

The long-term effects of the expanded LTPZ remain uncertain.While the immediate impact is a cooling of the market in Gangnam and Yongsan, the “balloon effect” could lead to price increases in neighboring areas. Government intervention may be necessary to prevent excessive speculation in these districts.

Real estate experts advise potential buyers and sellers to exercise caution and conduct thorough due diligence before making any decisions. The market is currently in a state of flux, and it is crucial to understand the implications of the new regulations before engaging in any transactions.

It is indeed necessary to see if it will lead to a real deal as the price is focused on prices.

– Real Estate Analyst

As of early 2025, Seoul’s real estate market continues to be a subject of intense scrutiny and government intervention. The success of the LTPZ expansion in achieving its intended goals will depend on a variety of factors, including overall economic conditions, interest rates, and government policies.