Seoul housing market gets overheated over optimistic sentiment toward new gov’t

Visitors take a photo with apartments seen behind them at Seoul Sky, an observation deck at the top of the Lotte World Tower in Seoul's Songpa District, June 8. Yonhap

The housing market in Seoul is heating up, driven by optimism among would-be homebuyers that the new administration of President Lee Jae-myung will not rein in property prices with regulatory policies.

But such hopeful sentiments can possibly go too far and result in a runaway housing market, experts warned Friday.

They pointed to the Bank of Korea’s (BOK) rate-cutting cycle, an upward trend in the stock market and other favorable factors for increased liquidity that can push housing demand to outstrip supply.

According to a Korea Real Estate Board survey, sales prices of apartments, the most popular form of housing in the country, rose 0.26 percent in Seoul in the second week of June from a week earlier.

The survey was taken for the first time after Lee took office following the June 3 presidential election win.

The 0.26 percent rise marked the steepest week-on-week increase in 2025. The board assessed that the increase was bolstered by the new government’s stance that, unlike previous liberal administrations, it would not try to control housing prices through taxation.

The districts where counter-land speculation measures have taken effect led the overall sales price hike across the nation’s capital.

The price went up 0.71 percent in Songpa District, 0.51 percent in Gangnam District, 0.45 percent in Seocho District, 0.47 percent in Seongdong District and 0.43 percent in Yongsan District.

The districts with less housing demand also saw a price increase, such as Jongno at 0.17 percent, Seongbuk at 0.13 percent, Nowon at 0.07 percent and Guro at 0.06 percent.

“A trend in rising housing prices is spreading from the highly-sought-after districts to other areas,” Kwon Dae-jung, a real estate professor at Sogang University, said.

Kim Je-kyung, a chief consultant at real estate agency Tumi, speculated that such a trend is “likely to become more distinct” over the BOK’s eased monetary policy.

“More would-be home owners are likely to take their chance to take out loans at a lower rate,” he said, referring to the benchmark interest rate falling to 2.5 percent last month to mark the lowest level in nearly three years.

“But at the same time, the trend suggests the housing supply will get shorter, especially considering the construction sector is sluggish,” Kim added.

Yoon Ji-hye, a researcher at Real Estate R114, voiced a similar view, pointing out that the stock market has had upward momentum and that stock investors with high returns may turn to the housing market.

“In return, the market may get volatile,” she said.

Under these circumstances, the government said it will keep a close watch on the real estate market.

On Thursday, a joint task force comprised of officials from the Ministry of Economy and Finance, the Ministry of Land, Infrastructure and Transport, the Financial Services Commission and the Financial Supervisory Service held a meeting to discuss the current issues on the market.

It vowed to comprehensively review all available policy tools to ensure that speculation, market-disrupting behavior and panic-driven demand do not undermine market stability.