South Korea’s effort to cool its property market by tightening scrutiny on overseas buyers is producing visible results, with foreign purchases of homes in the capital falling by more than half after new restrictions took effect.
At a government meeting on real-estate enforcement this week, officials said transactions involving foreign nationals declined across Seoul, Gyeonggi Province and Incheon in the months following the policy change.
Last August, authorities designated most metropolitan districts as land-transaction permit zones for foreign buyers. The measure requires purchasers to obtain approval and commit to living in the property for at least two years, a move aimed at curbing what policymakers had described as speculative demand that distorted prices in already expensive neighborhoods.
In the four months after the designation, foreign home transactions in the broader capital region dropped to 1,481 from 2,279 a year earlier, a decline of about 35%, according to the government’s review. Seoul recorded the steepest fall, sliding 51% to 243 deals from 496.
The pullback was even more pronounced in high-end districts that had already been subject to multiple layers of regulation. Transactions involving foreign nationals in the affluent areas of Gangnam District, Seocho District, Songpa District and Yongsan District dropped about 65%. Seocho posted the sharpest contraction among the capital’s boroughs, with activity plunging 88%.
Officials say the figures suggest that when faced with residency requirements and tighter approval procedures, some cross-border buyers are stepping back rather than restructuring transactions.
Outside the capital, cities with relatively high foreign participation also saw sizable retreats. In Gyeonggi Province, Bucheon recorded a 51% fall. In Incheon, the western district posted a 46% decline among major foreign-buyer destinations.
By nationality, purchases by Chinese buyers fell 32%, while those by Americans dropped 45%. Higher-priced properties were hit harder: transactions above 1.2 billion won declined 53%, compared with a 33% drop for homes below that threshold.
The data highlight how the government is widening its policy toolkit beyond domestic lending curbs. After years of relying primarily on mortgage limits and tax adjustments, authorities are now signaling that foreign capital, too, will face barriers if it is perceived to amplify volatility.
The Transport Ministry said local governments will begin checking whether buyers granted permits from September are complying with their mandatory residency obligations, adding an enforcement layer to the headline restrictions.
For global investors, the message is increasingly clear. Access to Korean housing—especially in Seoul’s prime districts—is becoming conditional not just on price, but on policy alignment with the government’s broader objective of stabilizing the market.
If sustained, analysts say, the approach could reshape who participates in one of Asia’s most tightly managed urban property arenas.
