[비즈한국] In May 2025, the South Korean real estate market is showing signs of a localized rebound, centered on the three Gangnam districts of Seoul and Yongsan-gu. At a glance, it looks as if the market is heating up again. However, if you broaden your perspective, the reality is quite different. The market in the outskirts of the Seoul metropolitan area and in regional provinces remains trapped in a quagmire of a transaction freeze and price corrections. Furthermore, the jeonse (long-term deposit rent) market remains in a state of severe stagnation, with the exception of temporary gains centered on newly built properties.
Despite this, the government has formalized the possibility of implementing a series of regulatory policies, such as the "additional designation of land transaction permit zones" and the "expansion of adjustment target areas and speculative zones." These remarks emerged from the 16th meeting of the "Real Estate Market and Supply Situation Inspection TF," which included representatives from the Ministry of Economy and Finance, the Ministry of Land, Infrastructure and Transport, the Financial Services Commission, the Seoul Metropolitan Government, the Bank of Korea, and the Financial Supervisory Service.
What point in time is this? 2025 is not just any ordinary year. It is the phase leading up to the presidential election, with a change in government imminent. The previous government, which took office in 2017, collapsed largely due to the failure of its real estate policies. "Over 30 rounds of measures," "regulatory bombs dropped under the guise of controlling the market," and "loan restrictions that blocked the dreams of young people to own homes" were all failed legacies of the past administration.
Confusing Real Demand with Investment Sentiment—Gangnam’s Rise Is Not the Entire Market
The direct reason the government is pushing for stronger regulations is the price increases observed in Gangnam, Seocho, Songpa, and Yongsan. Apartment prices in Seocho-gu recently rose by 0.72%, recording the highest growth rate in the nation. Looking at this figure alone, it might seem the government has a justification to intervene.
The essence is different. Apartments in the Gangnam area are already subject to triple regulations: they are designated as adjustment target areas, speculative zones, and land transaction permit zones. Even if the government wants to strengthen regulations, there are no cards left to play. On the other hand, the rise in this region is the result of a complex mix of short-term supply-demand imbalances, robust demand for luxury housing, and expectations for maintenance and redevelopment projects, all of which are natural market flows. In particular, price increases for high-end properties have no relevance to traditional middle-class or lower-income buyers.
By basing its signal for national market regulation solely on the movements in Gangnam, the government is incorrectly setting the scope of its policy.
Regional Provinces and Metropolitan Outskirts Remain Frozen
Currently, more than half of South Korea’s real estate market is in a state of stagnation or correction. According to KB Real Estate, among the five major metropolitan cities, Daegu is falling by 0.11%, Busan by 0.09%, and Gwangju by 0.06%. Daejeon and Ulsan are also showing flat or weak trends. Even in the capital area, the apartment sales price fluctuation rate in Gyeonggi-do has turned to a decline of –0.01%, and the decline in Incheon has widened to –0.03%.
In some regions, transaction volume has even fallen to levels lower than those seen during the COVID-19 pandemic. Attempting to prevent overheating by expanding regulations in such a market is like force-feeding fever reducers to a patient who has a cold.
The problem of unsold properties in the provinces is serious. Regional metropolitan cities and small-to-medium cities are seeing simultaneous declines in jeonse prices amid a surplus of large-scale new apartment move-ins and an exodus of demand; buying sentiment itself is at rock bottom. This market doesn't need regulation; it needs room to breathe.
What Is Needed Now Are Deregulation and Supply
In fact, the policy direction the government should be considering is quite the opposite.
First, it requires the sophisticated lifting of regulations. There are many areas that should be released from being adjustment target areas or speculative zones. Regions such as Yeonsu-gu, Namdong-gu, and Seo-gu in Incheon; Dongducheon, Icheon, and Anseong in Gyeonggi-do; and Yuseong-gu and Jung-gu in Daejeon are typical targets for deregulation. They are suffering from the triple affliction of falling actual transaction prices, a transaction freeze, and the accumulation of unsold units. The regulations remaining in these areas are merely shackles binding the market.
Second, we need to expand supply and revitalize private sector participation. Maintenance projects in downtown Seoul have been stalled for over a decade due to administrative procedures and political variables. While the government shouts slogans about projects like "Moa Town" and "Shin-tong Planning," very few have actually reached the stage of association establishment or groundbreaking. The market doesn't want "talks of supply"; it wants "actual construction sites." Real demand will only move when there is administrative acceleration for private redevelopment and reconstruction projects, supported by predictable licensing processes.
Do Not Repeat the Failures of Politics Through Policy
There were many reasons for the change in government in 2022, but the failure of real estate policy was the deciding factor. The market does not lie. It was in housing prices where the backlash from public sentiment first appeared. We all remember how those five years ended—the years of blocking redevelopment projects, imposing heavy taxes, tightening loans, and cutting off transactions. Now, with the presidential election only a few months away, the same scenes are repeating.
Expansion of land transaction permit zones? Redesignating regulated areas? The moment those words are uttered, the market freezes again. And the outskirts of the metropolitan area and the provinces are left behind, forever failing to become "lands of opportunity."
Now is the time to restore trust in the market. Instead of using regulations to instill fear, the government must win back public sentiment with concrete supply plans and fair institutional operation. Policy should function on trust, not on power.
The Presidential Election Should Be Won on Market Trust, Not Political Alignment
The current government’s re-examination of stronger regulations can be seen as a form of "policy alignment." Whether the intention is to look good for the next administration or simply to manage the current situation, the result is the same. The market receives a signal that "the government cannot be trusted," leading real buyers to sit on the sidelines while investors leave.
No one is fooled by regulations anymore. Instead, the market looks at "whether supply is being realized," "whether policies are consistent," and "whether loans are accessible." And depending on these factors, public sentiment moves once again.
If the government truly wants market stability, the path is clear: deregulation instead of regulation, trust instead of control, and predictability instead of intimidation. That is the solution to stabilize this upcoming presidential election and the residential market of South Korea.
Kim Hak-ryul, head of the Smart Tube Real Estate Research Institute, known by the pen name "Pashong," previously served as a team leader at the Real Estate Research Division of Gallup Korea. He manages and hosts the Naver blog "Pashong's World Exploration" and the YouTube channel "Stu TV." His books include "The Power of Gyeonggi Real Estate (2024)," "The Absolute Principles of Seoul Real Estate (2023)," "The Future of Incheon Real Estate (2022)," "Kim Hak-ryul's Absolute Principles of Real Estate Investment (2022)," "Future Map of South Korean Real Estate (2021)," "From Now On, Only Places That Will Rise Will Rise (2020)," and "South Korea Real Estate User Manual (2020)."