Exclusive
Real Estate Slump: Proportion of Foreign Buyers Approaches 1%

[비즈한국] #1 Last April, an American, "A," purchased a 240㎡ (exclusive area) unit at Hannam The Hill in Hannam-dong, Yongsan-gu, Seoul, for 12 billion won. This set a new record high, approximately 16% higher than the previous transaction price for the same area in August 2023 (10.3 billion won).

2 Last October, Chinese nationals "A" and "B" purchased a two-story detached house (pension) with a total floor area of 916㎡ on the coast of Sinheung-ri, Jocheon-eup, Jeju, for 2.45 billion won. This is about 88% higher than the previous actual transaction price of 1.3 billion won recorded in 2008.

Amid a prolonged real estate market slump, it has been confirmed that the proportion of foreigners among buyers who purchased Korean real estate last year reached an all-time high. Foreign real estate buyers, who accounted for only 0.2% in 2010 when relevant statistics began to be compiled, have increased fivefold in 14 years, approaching the 1% level. It appears that the buying trend of foreigners, who are less restricted by loan regulations than locals, is becoming more prominent in the real estate market during this downturn.

According to an analysis by BizHankook on the 22nd regarding the status of buyers who filed for ownership transfer registration (purchase) with the courts, a total of 17,488 foreigners purchased domestic real estate (including aggregate buildings, land, and buildings) and filed for ownership transfer registration last year, accounting for 0.98% of all buyers. In terms of the proportion of foreign buyers, this is the highest level since the relevant statistics began in 2010 (0.2%). After dipping to 0.62% in 2021, the proportion of foreign real estate buyers rebounded to 0.75% in 2022, when the real estate slump became visible, and rose to 0.91% in 2023.

More than half of the foreigners who purchased Korean real estate are Chinese. Last year, 11,351 Chinese nationals (0.64%) purchased Korean real estate and filed for ownership transfer registration. In 2024, the proportion of Chinese buyers, like the overall foreign buyer proportion, hit its highest level since 2010 (0.02%), when records began. Other foreign buyers by nationality last year included Americans at 2,531 (0.14%), Canadians at 671 (0.04%), Vietnamese at 576 (0.03%), and Russians at 298 (0.02%).

Incheon is the region with the highest proportion of foreign real estate purchases. Among the 103,761 buyers of real estate in Incheon last year, 1,681 (2.19%) were foreigners. The proportion of foreign buyers by region followed in the order of Gyeonggi (1.60%), Jeju (1.44%), South Chungcheong (1.14%), Seoul (1.07%), Ulsan (0.80%), North Chungcheong (0.73%), Busan (0.49%), South Gyeongsang (0.48%), Gangwon (0.42%), Sejong (0.38%), Daegu (0.33%), North Gyeongsang (0.32%), North Jeolla (0.31%), South Jeolla (0.29%), Gwangju (0.29%), and Daejeon (0.28%).

As the trend of foreign real estate purchases grows, so does the number of foreigners earning rental income from domestic real estate. An analysis of the status of lessors for real estate with fixed-date stamps last year showed that there were 17,679 foreign lessors, accounting for 0.62% of all lessors. While the number of foreign lessors decreased slightly (-125) compared to the previous year, the proportion of foreign lessors among all lessors increased slightly (0.006%). The number of foreign real estate lessors grew from 8,532 (0.45%) in 2014 to 17,494 (0.57%) in 2022, an eight-year span.

Naturally, the number of foreign homeowners is also on the rise. According to the Korea Real Estate Board, the number of homes owned by foreigners in Korea reached 95,058 in the first half of last year, an increase of 11,546 (13.83%) compared to the second half of 2022, when relevant data collection began. There were 93,414 foreigners owning domestic homes, with an average of 1.02 homes per person. Of the homes owned by foreigners, 86,695 were apartment units (multi-family housing) and 8,363 were detached houses, indicating a high proportion of apartment units.

The prevailing analysis is that this increase in foreign real estate purchases is because foreigners are less restricted by loan regulations than domestic residents. When foreigners take out loans from Korean banks, they are subject to domestic regulations such as the Loan-to-Value (LTV) ratio and Debt-to-Income (DTI) ratio. However, when they secure loans from banks in their home countries, they are subject to fewer regulations at the discretion of those banks, making it much easier to obtain financing. Furthermore, in the case of residential properties, it is difficult for the government to track the housing status of individual foreign family members, leaving them relatively free from multi-home ownership regulations.