I. Introduction: The 'Regulatory Bomb' 10-15 Measures and the Paradoxical Silence of the Market

the government recently expressed its commitment to market stability by announcing the powerful 10-15 Real Estate Measures, which grouped all of Seoul and 12 regions in Gyeonggi Province into a Land Transaction Permit Zone (LTPS) and drastically tightened mortgage lending regulations. Based on the intensity of the policy alone, it has been described as a 'regulatory bomb' of epic proportions.

indeed, the market was immediately shocked by the measures: according to the Ministry of Land, Infrastructure, and Transport's real-time transaction price system, the transaction volume of Seoul apartments plummeted by a whopping 78.9% in the ten days following the announcement of the measures compared to the previous ten days, creating an extreme 'transaction cliff'. As such, the regulations seem to have succeeded in paralyzing buying and selling activity in the short term.

interestingly, however, the market's reaction has been skeptical. according to a poll, more than half of South Koreans believe that the government's draconian measures will ultimately be ineffective in stabilizing real estate prices, suggesting that after repeated rounds of strong regulatory measures, market participants have lost faith in government policies that keep repeating short-term prescriptions without addressing the underlying supply problem.

in this regard, experts such as Choi Eun-young, director of the Korea Urban Institute, commented that it is "difficult to agree with the assessment that the 10-15 real estate measures are very strong." Rather than being a comprehensive measure that shows the long-term direction of the Lee Jae-myung administration's housing policy, the measures are more of a short-term time-buying measure, like an "ice-cube" to stop the market from overheating. This increases the likelihood that the regulatory effects will be interpreted as a "regulatory adjustment period" rather than a temporary psychological scare.

II. Key Regulatory Analysis: Controversy over the Effectiveness of the Land Transaction Permit System (LTPS)

the centerpiece of the 10-15 measures is the expansion of the Land Transaction PermitSystem(LTPS), which covers a wide range of areas, including all of Seoul. While the LTPS aims to curb speculative demand, it has a fundamental limitation: it does not restrict transactions for residential purposes.

1. precedent shows the limitations of LTPS

The ineffectiveness of the LTPS has been clearly demonstrated in areas that have already been preceded by regulation. despite being outside of the direct impact of the measure, Gangnam 3 (Gangnam, Seocho, and Songpa) and Yongsan-gu, which were previously designated as land transaction permit zones, continued to outperform the average growth rate of Seoul apartment prices (6.6%) even six months after the designation, with Songpa-gu recording the highest growth rate among the 25 districts at 10.4%. Record-breaking transactions continued to take place in the Jamsil neighborhood, demonstrating the failure of the LTPS to stem price growth in core areas.

this repetition of regulation has the side effect of reinforcing the "sticky wicket" phenomenon among market participants: the learning effect is that values in core neighborhoods consolidate despite regulation, leading to an expectation of price appreciation after adjustment to regulation rather than medium- to long-term price stability.

2. market distortions and the supply paradox

The expansion of the LTPS has made 'gap investing' impossible in the short term, prompting landlords to take back vacant units. In fact, the number of apartment listings in Seoul fell by 11.3% after the measures were announced. While this has had the effect of dampening sales transactions in the short term, it has also reduced the number of available units on the market.

experts point out that supply isn't just about building new homes, but also about getting homes on the market, and expanding the LTPS has the paradoxical effect of preventing this. Prolonging the transaction cliff can have the opposite effect, as a small number of record-breaking transactions act as a benchmark for market prices, reinforcing upward expectations.

the measures also exacerbated the confusion caused by administrative boundaries. For example, in the case of the Maegeukjeong Palusid complex in Suwon, only three of the 32 units were subject to the regulated land transaction permit system because they belonged to Suwon's Paldal District, while the remaining 29 units remained in the unregulated area, causing extreme confusion among landlords and prospective buyers. Such administrative irrationality undermines the credibility of the regulations.

3. predicting hyperpolarization after regulatory adaptation

the prevailing view is that this regulatory environment will intensify thehyperpolarization phenomenon in the long run. while Park Won-gap, a senior real estate expert at KB Kookmin Bank, expects a correction phase to continue for the next three to six months, Jeong Soo-yeon, a professor of economics at Jeju National University, analyzed that prices could rise further in the coming months as the market adapts to the regulations.

kim In-man, president of the Real Estate Economic Research Institute, also predicted that prices in core areas such as Gangnam will continue to rise, while regulations will intensify the hyper-polarization phenomenon, making it harder for the middle class to buy a home. This is because while regulations have a short-term effect of curbing liquidity and preventing speculation, they structurally block effective supply and reinforce scarcity in core areas.

III. Invisible pressure: The roadmap and risks of real estate tax hikes

while the 10-15 measures ostensibly do not include direct measures to increasereal estate taxes, such as raising tax rates, the potential pressure exists for the government to sharply increase the holding tax burden at any time. this could be a key variable in determining the future direction of the real estate market.

1. mechanisms for automatic increases in the retention tax burden

the holding tax is composed of property tax and comprehensive real estate tax (ad valorem tax), and is based on the open market price of a house. in 2025, the average national housing list price increased by 3.3%, up 2 percentage points (p) from 2024. due to the increase in list prices, the home ownership tax in 2025 is projected to be KRW 7.3 trillion, an increase of 5.6% year-on-year. this lays the foundation for an automatic increase in the tax burden without any direct tax rate adjustment by the government.

in addition, the possibility of raisingthe fair market value ratio, which is the key to the calculation of the final tax, is constantly being discussed. the Moon Jae-in administration lowered the rate to 60%, but there is speculation that it will be raised again to 80% from next year. tax experts estimate that if both the realization rate and the fair market value ratio are raised, the tax burden could more than double from the current level. In particular, for single-family homes, which are currently exempted, a mere increase in the fair market value ratio to 60 percent could increase the holding tax burden by 50 percent.

2. tax shifting and rental market instability

past experience has shown that stricter capital gains taxes have failed to stabilize house prices. the Moon Jae-in administration increased the ad valorem tax rate in 2018 and raised the list price realization rate to 69% in 2020, but Seoul apartment prices increased even more, rising 13% in 2020 and 16.4% in 2021. Several research reports also support that measures to increase the ad valorem tax, such as increasing the list price, tend to drive up home prices rather than lower them.

a more serious side effect is tax burden shifting: the increased tax burden, such as stamp duty, is not borne solely by landlords, but is passed on to renters, causing rents to rise. this flies in the face of the policy goal of protecting real consumers and the homeless. if transaction regulation fails, and the possession tax card is played, there is a very real risk of creating a vicious cycle of increased regulation and taxation that reinforces the status quo and exacerbates the suffering of the unhoused.

Iv. conclusion and expert final thoughts: strategies beyond a wait-and-see approach

10-15 While the real estate measures are certainly powerful short-term prescriptions to cool down the market's rapid overheating, they fail to provide a direction for fundamental house price stability and housing policy.

in the short term, the widespread application ofthe Land Transaction Permit Systemand tightening of lending regulations may lead to a correction phase over the next three to six months, with a wait-and-see attitude and fewer transactions at record prices.

however, the medium- to long-term red flags are as follows: first, transaction restrictions will reduce the number of available properties, resulting in a long-term supply shortage, and upward pressure on prices may increase after the market adapts to the regulations; second, the hyper-polarization of the property market will definitely intensify as record prices persist in core areas despite the regulations and a balloon effect appears in unregulated areas; and third, if the market fails to stabilize, the instability in the sublet market may be maximized as pressure toincrease property taxes(such as adjusting the fair market value ratio) becomes visible.

experts advise that real estate buyers should not get caught up in the short-term "transaction cliff" or "correction phase," but rather take a long-term view of the risk of tax increases and preserving value in core neighborhoods.