Seoul Mayor Oh Se-hoon has issued a public apology for the overheated real estate market, acknowledging that the situation resulted from the city’s earlier decision to lift a permit system for housing transactions.

In a briefing Wednesday, Oh apologized after saying he humbly admits that the real estate market in Gangnam and the surrounding area became more volatile after the city government decided to lift the permit system for the Gangnam and Songpa districts last month. 

His apology came a few hours after the central government and the Seoul Metropolitan Government said all apartment complexes in the Gangnam, Seocho, Songpa and Yongsan districts will be subject to the permit system for housing transactions for six months starting Monday.

Seoul lifted the permit system for the first time in five years on February 12 for apartment complexes in the Jamsil neighborhood in Songpa District and for the Samsung, Daechi and Cheongdam neighborhoods in Gangnam District.

The mayor said after the rules were relaxed, the number of transactions reported in the Gangnam and Songpa districts surged and so did the practice of gap investment, where buyers leverage a lump-sum deposit to cover a significant part of the property’s cost.

According to Oh, the sharp rise in speculative transactions made a policy response inevitable.