South Korea’s ban on foreign homebuyers to cool Seoul prices, Chinese spending

South Korea’s new restrictions on foreign homebuyers

are likely to cool housing prices in Seoul

and neighbouring cities, according to property agents, following a surge in the number of buyers from mainland China

who bought homes in the middle and high-end segments of the market.

Hongkongers and mainland Chinese had acquired 96,955 properties in South Korea as of May, a 78.5 per cent increase from the 54,320 real estate assets that they owned in 2020, according to a report by The Chosun Daily, a local news outlet. It said these properties included residential units, commercial assets and parcels of land.

“We anticipate the ban will contribute to market cooling, price stabilisation, and improved access for local buyers – to some extent – as domestic buyers face strict mortgage caps, whereas foreign buyers often circumvent these through overseas financing,” said JoAnn Hong, senior director for research and consultancy at Savills Korea.

The measure, which took effect last month, marked the government’s latest effort to counter speculation in the housing market

, as rising property prices have become a political liability for President Lee Jae-myung

, who promised to ease living costs when he took office in June.

Before the Ministry of Land, Infrastructure and Transport rolled out the policy, which will remain in effect for one year, South Korea was the ninth most popular destination for Chinese property investors, according to data compiled by real estate broker Juwai IQI.

Since 2022, foreigners accounted for about a fifth of residential transactions in the middle and upscale home segments, particularly in the Seoul metropolitan area, Savills’ Hong said. This area includes the city of Incheon and Gyeonggi province.