Despite Stricter Barriers in Seoul Real Estate, Non-Resident Interest Remains Strong... Demand Concentrates in Three Gangnam Districts [Real Estate AtoZ]

Decrease in Real Estate Purchases by Seoul Residents Outpaces Non-Residents
Purchases Rise in the Three Gangnam Districts and Yongsan District Despite Loan Regulations

Apartments in the Jamsil Area of Seoul

As government lending regulations have reduced real estate transactions in Seoul, the decline has been more pronounced among Seoul residents than those from outside the city. This suggests that interest in Seoul real estate remains strong among non-residents. Among residents outside the metropolitan area, highly desirable districts such as the three Gangnam districts are still considered major investment destinations.

According to an analysis of court registry data on September 12, the number of non-residents who purchased collective buildings (including officetels, apartments, townhouses, and multiplex houses) in Seoul last month was 4,275. This represents a decrease of about 11% compared to June, when lending regulations began and the figure stood at 4,803. The number of Seoul residents buying Seoul real estate declined even more sharply, dropping from 16,068 to 12,516 during the same period-a decrease of approximately 22%. In other words, the decline among non-residents was only half that of Seoul residents.

This demonstrates that, despite lending regulations, Seoul real estate remains relatively attractive as an investment for those living outside the city. The June 27 lending regulations capped the mortgage loan limit for properties in Seoul, the metropolitan area, and regulated zones at a maximum of 600 million won. Additionally, buyers are now required to complete their move-in registration within six months of the loan execution date, strengthening the requirement for actual residence. These measures have created significant obstacles for non-residents seeking to purchase homes in Seoul.

Nevertheless, non-resident buyers remain active, with demand concentrated on prime areas. Data from the Korea Real Estate Board shows that, compared to June-before the metropolitan area lending regulations took full effect-there were actually more non-resident apartment purchases in July, when access to funds became more restricted, in seven out of Seoul's 25 districts: Jongno, Yongsan, Dobong, Geumcheon, Seocho, Gangnam, and Songpa. While the total number of non-resident real estate purchases in Seoul decreased by about 24%, transaction volumes increased in highly sought-after areas such as the three Gangnam districts and Yongsan District.

Seocho District saw the largest increase in non-resident purchases, more than doubling from 22 to 51 units. Significant increases were also recorded in Yongsan and Songpa Districts, while double-digit growth rates were observed in Jongno, Geumcheon, and Dobong Districts. Experts explain that the rise in non-resident apartment purchases in the three Gangnam districts and similar areas is both a response to the "one smart property" strategy and an anticipation of further regulatory tightening in the future.

Yoon Sumin, a real estate specialist at NH Nonghyup Bank, commented, "Even though apartments in the three Gangnam districts and Yongsan District are subject to lending restrictions and designated as land transaction permit zones, requiring actual residence, the fact that non-residents are still making purchases suggests that there is demand to enter the market before regulations become even stricter. Demand for the 'one smart property' strategy also appears to be a contributing factor."