Foreign Buyers Rush to Beat LTPZ Deadline... Metropolitan Purchases Hit 5-Year High [Real Estate AtoZ]

Rush to Buy Before LTPZ Implementation by Foreigners
Incheon Sees 66.5% Surge Among Metropolitan Areas
Number of Foreign Buyers in Non-Metropolitan Regions Continues to Decline

Panoramic view of apartment complexes in Seoul city center

Last month, the number of foreign buyers purchasing real estate in the Seoul metropolitan area exceeded 1,000 for the first time in over five years. Foreigners rushed to make last-minute purchases to avoid the designation of Land Transaction Permission Zones (LTPZ). It appears that end-users, rather than investors, were the main drivers of these transactions. Instead of high-priced homes in key locations in Seoul or Gyeonggi Province, transactions increased significantly in Incheon. With housing prices on the rise and new regulations set to take effect, many decided to proceed with their purchases.

According to the Court Registration Information Plaza on the 27th, the number of foreigners who purchased collective buildings (such as officetels, apartments, multiplex houses, and multi-family houses) in the metropolitan area last month was 1,051. This represents a 7.5% increase compared to 978 in the previous month. Last month's figure is the highest since September 2020, when it reached 1,128, and it marks a 73.4% increase compared to 606 at the beginning of the year.

This surge reflects the rush to purchase before the implementation of the foreigner LTPZ. On August 26, the government designated all of Seoul, as well as major areas in Incheon and Gyeonggi Province, as Land Transaction Permission Zones for foreigners for one year. Foreigners must obtain permission to purchase a home, move in within four months, and reside in the property for two years after acquisition.

Among the metropolitan areas, Incheon saw the most transactions. The number of foreign buyers there increased by 66.5%, from 221 in July to 368 last month. This contrasts with a decrease of 15.3% in Seoul and 7.7% in Gyeonggi Province. Incheon is the area in the metropolitan region where the number of foreigners is growing the fastest. According to Ministry of Justice statistics, the number of registered foreigners in Incheon last year was 89,129, a 10.0% increase from the previous year. During the same period, Seoul saw a 5.1% increase.

In contrast, the number of foreigners purchasing real estate outside the metropolitan area dropped sharply. Last month, 284 foreigners bought collective buildings in non-metropolitan areas, a 15.2% decrease from 335 in the previous month. Compared to June, when the figure reached a yearly high of 341, this represents a 16.7% decrease. The number of buyers dropped to the 280s for the first time in six months.

Interest among foreigners in real estate outside the metropolitan area continues to decline. Last month, the number of foreigners who bought property in non-metropolitan regions accounted for only about 27% of those who bought in the metropolitan area. As recently as June, the figure stood at 35.8%.

Even among non-metropolitan properties purchased by foreigners, most were located close to the metropolitan area. South Chungcheong Province and North Chungcheong Province recorded 65 and 53 buyers, respectively, accounting for 41.5% of the total. They were followed by South Gyeongsang Province (24), Busan (23), Jeju (22), and North Gyeongsang Province (20). In contrast, the number of foreigners buying real estate in Sejong, North Jeolla Province, and Gwangju remained in the single digits, with 6 in North Jeolla, 5 in Sejong, and 3 in Gwangju.

Yoon Sumin, a real estate expert at NH Nonghyup Bank, explained, "About 50% of foreigners purchasing real estate in Korea do so for residential purposes, while the remainder are presumed to be investors. Considering this, expectations for price increases are higher in the metropolitan area than in the provinces, which is drawing more buyers there. Although the metropolitan area has been designated as an LTPZ, it still has significant potential for price appreciation, making it attractive for investment."