SEOUL — South Korea will roll out strict new rules on foreign home buying in the Seoul region from 26 August 2025, seeking to cool off fast-rising house prices and limit speculative investment.
Non-resident foreigners hoping to purchase a home in Seoul, seven parts of Incheon, or 23 cities and counties in Gyeonggi Province must now get approval from local authorities before buying.
If the purchase goes ahead, the new owners must live in the home within four months and stay there for at least two years. This move aims to stop the practice of “gap investment”, where buyers take advantage of Korea’s special jeonse rental system with large upfront deposits.
The Ministry of Land, Infrastructure and Transport announced these measures on 21 August, marking the first time such controls have targeted foreign buyers to help moderate the housing market. These restrictions cover most of the Seoul metro area, where property deals involving foreign residents have climbed by 26% each year since 2022, data shows.
Foreigners bought 4,568 homes in 2022, jumping to 7,296 in 2024. Chinese nationals make up nearly three-quarters of these purchasers, while Americans account for around 14%. By the end of 2024, foreigners owned 100,216 homes in the country, with Chinese residents holding over half of these properties.
Housing Affordability
The move reflects growing discontent among locals, as home prices have soared and turned housing into a prime political issue for President Lee Jae-myung. Lee, who took office in June 2025, promised to make living more affordable. Recent cuts to interest rates by the Bank of Korea have pushed up demand, giving foreign buyers an edge since they often avoid tight loan caps that locals face.
Since 27 June 2025, South Korea has set a ceiling of 600 million won (£341,000) for home loans, but overseas funds remain outside this limit. This loophole has let some foreigners buy high-end properties, such as a 25-year-old foreigner who bought a 7.5 billion won (£4.73 million) house and another with an 18 billion won flat in Yongsan, both paid in cash.
A spokesperson for the Land Ministry explained that there is no full ban on foreign purchases. Foreign buyers who intend to live in the property must go through extra paperwork, but can still qualify. The aim is to stop market distortions linked to speculative investment from overseas.
Those who ignore the new rules or fail to meet the residency requirement could face fines up to 10% of the property’s value and risk having the deal cancelled. Buyers using money from abroad must also outline where their funds come from and show visa details within 30 days of the purchase. Any deals that raise suspicion may be flagged to the Korea Financial Intelligence Unit for further investigation.
South Korea Joins Other Countries
South Korea now joins other countries risking similar issues with foreign-led price hikes, especially from Chinese buyers. Canada’s ban on foreign ownership of residential property began in January 2023 and has just been extended to 2027.
Non-citizens and those without permanent residency cannot buy homes there, with offenders facing fines of up to 10,000 Canadian dollars (£5,700) and forced sales. This ban came after a large wave of interest from Chinese investors, which sent prices soaring in cities like Vancouver and Toronto. In the past decade, median home prices there have doubled.
New Zealand took similar action in 2018, stopping non-residents from buying existing homes after Chinese buyers were linked with a steep 60% jump in Auckland’s median house prices between 2012 and 2018. Foreigners may still buy new builds, but the rules have slowed speculative interest.
Australia also requires foreign buyers to get approval from the Foreign Investment Review Board for residential property. Non-residents can’t buy existing homes, and sales of new properties come with strict terms. Chinese nationals made up nearly 20% of foreign property buyers in Australia from 2015 to 2020, fuelling a 40% rise in median city home prices.
Many in Korea feel the system has been unfair, with locals facing tougher loan rules and higher taxes for owning more than one home, while overseas investors, especially Chinese, use legal gaps to their advantage.
Listings on Chinese platforms such as Juwai show premium Seoul homes for sale, with price tags of up to 107 million yuan (£11.8 million). Critics say this overseas demand pushes prices up and limits supply for ordinary Koreans, particularly in Seoul, where average flat prices broke the 1 billion won (£586,000) mark in 2025.
Seoul’s mayor, Oh Se-hoon, has responded by calling for a review of how other countries, like Canada and Australia, manage foreign property purchases, with the idea of adopting similar measures. The National Tax Service has started investigations into 49 foreigners, mostly from China and the US, suspected of buying expensive Seoul homes illegally.
Some experts, such as Lee Eun-hyung from the Korea Research Institute for Construction Policy, support the move as a step towards balance. Yet, others say the new rules still fall short of giving local buyers the same access to finance that foreigners enjoy.
South Korea is now part of a bigger shift seen in countries including Canada, New Zealand, and Australia, to protect local buyers from outside investors. The hope for many Koreans is that these new requirements will bring some stability to the housing market. Whether the changes stick and make buying a home easier for locals remains to be seen.
