One in Four Houses in Seoul Has a New Owner from Outside the Area

Growing Belief in Invincibility Among Regional Investors
Seoul Residents 'Yeongkkeul' Gyeonggi Province Housing

One out of every four houses traded in Seoul this year was purchased by non-residents. Despite the government's successive measures, there is no sign of housing prices stabilizing, leading to an expansion of Seoul housing purchases by residents from other regions. On the other hand, many Seoul residents are being pushed out to Gyeonggi Province as they cannot afford the soaring housing prices.

According to the Korea Real Estate Board's statistical system on the 14th, among the 131,996 houses traded in Seoul from the beginning of this year to July, 33,460 houses, or 25.3%, were bought by non-residents. This means that one out of every four houses traded was purchased by a non-resident. The proportion of non-residents buying houses in Seoul is the highest since the Real Estate Board began compiling related statistics in 2006. This proportion first reached the 20% range in 2018 at 20.3%, then steadily increased to 21.7% in 2019 and 23.2% last year.

Among the houses traded in Seoul this year, apartments accounted for 67,550 units, with non-residents purchasing 20.2% (13,675 units). There is an interpretation that local investors are increasingly buying cheaper housing such as multi-family or row houses, or detached and multi-unit houses, instead of expensive apartments.

Another characteristic of local expedition investments is the strong preference for Gangnam. Among the 10,762 houses traded in Gangnam-gu during this period, the proportion of non-resident buyers reached 27.2%, up 3.6 percentage points from 23.6% last year. The proportion of non-resident buyers among houses traded in Seocho-gu and Songpa-gu was 22.5% and 19.6%, respectively.

However, amid such expedition investments in Seoul housing, Seoul residents have actually increased their proportion of house purchases in Gyeonggi Province. Among the 290,234 houses traded in Gyeonggi Province during this period, Seoul residents purchased 50,385 units, accounting for 17.3%. This is 1.7 percentage points higher than 15.6% last year. The proportion of non-residents excluding Seoul residents buying houses in Gyeonggi Province was 9.7%, about half that of Seoul residents. Industry analysts interpret this as an increase in homeless people being pushed to Gyeonggi Province because they cannot afford the soaring housing prices in Seoul.

The increasing proportion of local residents buying houses in Seoul is interpreted as due to a strong belief in housing as a safe asset. According to the monthly KB Housing Price Trend, as of last month, the average sale price of houses in Seoul was 868 million KRW, and the average sale price of apartments was 1.177 billion KRW. These figures have nearly doubled in just over four years since the current government took office.

Park Won-gap, Senior Real Estate Specialist at KB Kookmin Bank, said, "The fever for Seoul housing purchases by non-residents should be seen as speculative demand due to a lack of suitable investment places," adding, "Among asset holders, the perception that real estate in Gangnam, Seoul, is a safe investment in an era of low growth is becoming firmly established."