South Korea Cracks Down on Foreign Property Purchases with Strict Residency Rules

South Korea has imposed sweeping restrictions on foreign property purchases in Seoul and its surrounding regions, introducing mandatory residency rules and government approval requirements. The move aims to curb speculative buying, cool the overheated housing market, and protect local buyers squeezed by recent lending caps.

South Korea Foreign Property Restrictions Take Effect

Starting today, overseas investors looking to buy homes in the Seoul Metropolitan Area, 23 cities in Gyeonggi Province, and seven districts in Incheon must first secure government permits. Once approved, they must move into the property within four months and remain for at least two years.

Non-compliance carries steep penalties: up to 10% of the property’s value in fines and possible contract nullification.

Seoul Housing Market Overheats Amid Foreign Buying

The new rules follow a surge in foreign real estate transactions:

• 4,568 purchases in 2022
• 7,296 purchases in 2024
• 4,431 purchases by July 2025, on track to surpass 7,600 this year

This growth, averaging more than 26% annually, has reshaped the Seoul housing market.

At the same time, domestic buyers have faced tighter lending rules. In June, South Korea capped household mortgage loans at 600 million won ($439,000). While Korean families struggled under stricter loan limits, foreign investors tapped overseas financing to continue acquiring luxury apartments and high-end villas, creating what officials called “market distortions.”

Record-Breaking Deals Raise Concerns

Recent transactions highlight the imbalance:

An American buyer set a record in April, purchasing a 240-square-meter Hannam apartment for 12 billion won ($8.7 million).

A Maltese investor acquired a 7.4 billion won villa in Gangnam in March.

Such deals have fueled public frustration, pushing the government to act decisively.

South Korea’s Housing Policy: “Welfare Before Speculation”

First Vice Land Minister Lee Sang-kyung emphasized that the restrictions are designed to “prevent speculative foreign capital inflows and stabilize house prices, thereby contributing to housing welfare for our citizens.”

To enforce compliance, the government will tighten oversight of funding sources and require detailed documentation of foreign financing arrangements.

Spotlight on Foreign Buyers in Korea

Foreigners using South Korea’s property manager system—where local intermediaries purchase on behalf of overseas clients—have come under special scrutiny. Since August 2023, 497 homes have been purchased in the capital region this way:

• Americans accounted for over 60%
• Chinese buyers made up 22%

Nationwide, Chinese nationals lead the list of foreign homeowners with 56,301 properties, followed by:

• 22,031 owned by Americans
• 6,315 by Canadians
• 3,360 by Taiwanese buyers

Outlook: A Turning Point for Korean Real Estate

The government’s crackdown signals that South Korea is no longer willing to let foreign speculation drive up property prices at the expense of its citizens. For global investors, the message is clear: buying into Korea’s real estate market will now come with strict conditions, mandatory residency, and higher scrutiny.

The big question: will this cool speculative buying—or simply push foreign investors into new loopholes?

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The Citizenship by Investment (CBI) Index evaluates the performance of the 11 nations currently offering operational Citizenship By Investment (CBI) programs: St Kitts and Nevis (Saint Kitts and Nevis), Dominica, Grenada, Saint Lucia (St. Lucia), Antigua & Barbuda, Nauru, Vanuatu, Türkiye (Turkey), São Tomé and Príncipe, Jordan, and Egypt.