Chinese-led real estate shopping triggers debate
Apartment complexes seen from Seoul Sky in Songpa District, Seoul, Sunday. Yonhap
Foreign-owned homes up 5.4 percent in six months, led by Chinese buyers
As the share of land and housing purchases by foreigners continues to grow in Korea, debate is resurfacing over whether regulations should be tightened, especially amid concerns of market disruption and discrimination against locals.
While some government officials are pushing for legal reforms based on the principle of reciprocity, others caution that any regulatory move must follow a thorough assessment of market impact.
According to the Ministry of Land, Infrastructure and Transport on Monday, the Seoul Metropolitan Government recently sent an official request to the ministry urging it to formalize reciprocity provisions in real estate-related laws such as the Real Estate Transaction Reporting Act.
This followed an order from Seoul Mayor Oh Se-hoon to promptly propose countermeasures regarding foreign land and housing purchases.
Reciprocity, in this context, refers to the idea that if a country restricts or prohibits real estate purchases by Korean citizens, then Korea should impose similar restrictions on citizens from that country. Currently, no real estate law in Korea includes such a principle.
Foreign ownership on a steady rise
Foreign ownership of Korean real estate has been steadily increasing. As of the end of last year, foreigners owned approximately 268 million square meters of land in Korea — a 1.2 percent increase from the previous year.
The number of housing units owned by foreigners also rose 5.4 percent to 100,216 units as of the end of June 2023.
According to the Supreme Court’s real estate registration data, 8,655 foreign landlords registered lease contracts between January and May this year, indicating active investment.
Calls for tighter rules have intensified due to the limited oversight on foreign transactions, even as foreign purchase rates climb.
In particular, China bans or heavily restricts real estate ownership by Koreans within its borders, prompting critics to argue that a reciprocal system is necessary.
Data show that of the homes in Korea owned by foreigners, Chinese nationals hold 56,301 units — accounting for 56.2 percent. Similar trends in countries like Canada, where rising Chinese investment has been linked to home price surges, are also fueling concern.
While foreigners must comply with local mortgage regulations and property ownership disclosures, enforcement is limited when funds are sourced from overseas institutions.
If a foreign national takes out a mortgage from a bank in their home country, Korean authorities cannot easily verify financial details or enforce acquisition or capital gains tax penalties typically applied to multi-homeowners.
“Several countries, including Canada and Australia, already restrict home purchases by foreign nationals in light of such side effects,” a Seoul city official said.
Economic benefits
However, critics of a regulatory overhaul argue that the overall share of real estate owned by foreigners is still relatively low, and that their investment brings economic benefits.
According to the land ministry, foreign-owned land accounts for only 0.27 percent of total land area, and their share of the housing market is 0.52 percent.
While a Chinese national’s high-profile purchase of a 12 billion won ($8.7 million) home in Seoul’s Seongbuk District sparked headlines, most foreign-owned properties are in cities like Bucheon (5,203 units, or 5.2 percent) and Ansan (5,033 units, or 5.0 percent), where buyers are believed to be actual residents — supporting the case for moderation.
The central government has yet to initiate any formal legislative process but says it will begin by analyzing the current situation.
“We have not launched full-scale discussions on codifying reciprocity,” a land ministry official said. “We are reviewing Seoul’s proposal alongside international examples, and since a related bill is already pending in the National Assembly, a comprehensive review will be needed.”
This article from the Hankook Ilbo, the sister publication of The Korea Times, is translated by a generative AI and edited by The Korea Times.