[비즈한국] When discussing the real estate market under the Lee Jae-myung administration, we must look beyond mere policy changes and examine in three dimensions the structural reality of South Korea's real estate market, the psychology of market participants, and future trends.
The South Korean real estate market over the past few years can be summarized by three keywords: extreme volatility, policy fatigue, and polarization. The launch of the Lee Jae-myung administration signals a departure from the previous regulatory-heavy policies toward a new, pragmatic, and supply-oriented paradigm. This column intends to delve into the direction of the Lee Jae-myung administration's real estate policy, the resulting market changes, and the strategies that actual residents and investors should adopt.
First, many are likely curious about the impact of the presidential election results on the real estate market. Some believe that housing prices rise when the Democratic Party is in power, but in reality, it is economic variables such as interest rates, supply, and the economy that determine market trends, not the color of the administration. During the Lee Myung-bak administration, prices rose briefly on expectations of deregulation before plummeting due to the global financial crisis; during the Park Geun-hye administration, the decline slowed due to expectations of eased reconstruction regulations.
Under the Moon Jae-in administration, the rate of increase slowed due to regulations like higher holding taxes, but prices rose further due to ultra-low interest rates and abundant liquidity. Under the Yoon Suk Yeol administration, the market trended upward on deregulation hopes but shifted to a decline due to high interest rates. Ultimately, while a presidential election can be a turning point, it is the conclusion written by the economy that dictates the final trajectory of housing prices.
The Lee Jae-myung administration's real estate policy must be significantly different from those of its predecessors. This administration is explicitly stating that it "will not control housing prices with taxes." This is a pragmatic approach that emphasizes practical supply expansion and support for actual residents rather than suppressing demand through taxation. President Lee Jae-myung has elevated the redevelopment of first-generation new towns like Bundang and Ilsan into a state-level urban renewal project and pledged to expand high-quality public rental housing.
The core intention is to increase supply where demand is concentrated, thereby dispersing the upward price pressure focused on the Gangnam area into buffer zones. Furthermore, with fine-tuned adjustments centered on DSR (Debt Service Ratio), the administration has signaled the application of flexible loan regulations for the youth that reflect future income. Regarding taxation, it has promised to maintain the status quo on holding taxes, reflecting a "learning effect" aimed at minimizing policy instability.
The Lee Jae-myung administration's policy direction can be summarized into three main points.
First, it aims to revitalize private-sector redevelopment projects by easing reconstruction and redevelopment regulations, speeding up licensing, and increasing floor area and building-to-land ratios. Second, it plans to push for practical supply expansion through public rental housing located near workplaces in city centers, residential complex platforms in "sle-se-gwon" (residential areas where one can access leisure and convenience facilities in casual "slipper" wear), and mixed-use development of idle land (railway yards, GTX transit stations, public office sites, etc.). Third, it intends to induce lower sales prices and reduce project costs by resolving the issue of excessively high pre-sale prices and ensuring the transparency of construction costs.
These policy changes are significant in that they focus on the quality of life and market stability centered on actual residents, rather than just increasing supply volume. In particular, the Lee Jae-myung administration emphasizes a pragmatic approach of stabilizing the real estate market through supply expansion centered on the middle and lower classes instead of tax regulations.
As of 2025, the real estate market can be summarized by the word "hyper-polarization." In core areas of Seoul and the metropolitan region—specifically the three Gangnam districts, Yongsan, Mapo, and Seongdong—housing prices continue to soar, with a notable scarcity of listings and a concentration of actual resident and investor demand. First-generation new towns are seeing their value highlighted as alternatives to Seoul and due to redevelopment expectations. Conversely, the outskirts of the metropolitan area and rural provinces are in a complex phase of stagnation, characterized by a backlog of unsold units, population decline, sluggish trading, and falling prices. This polarization is moving beyond simple price gaps to represent a divide in future value and asset defense capabilities.
The "supply cliff" acts as a key factor in market instability. The number of nationwide apartment move-ins in 2025 is approximately 280,000, a 23.3% decrease from the previous year, and a further 24.3% decrease to 210,000 is expected in 2026. In Seoul, the number is projected to plummet from 46,000 this year to 24,000 next year. This inevitably increases instability in both the sales and jeonse (long-term deposit rental) markets in the mid-to-long term.
Interest rates and loan regulations are also significantly impacting the market. In May 2025, the Bank of Korea lowered the base interest rate from 2.75% to 2.5%, signaling a potential influx of capital and an increase in housing demand. However, the third phase of DSR, implemented starting in July, applies stress rates to all household loans, effectively reducing loan limits. This will significantly decrease the purchasing power of low-to-mid-income buyers and the youth, further deepening the polarization between high-priced units in core areas and the outskirts/provincial resident markets.
For both actual residents and investors, a "smart single home" and "long-term holding" are the core strategies. With the government’s regulations on multi-home owners, supply shortages, interest rate cut expectations, and tightened loan regulations intersecting, the structure where only apartments with proven location and future value survive is becoming more solidified. Regions with combined development potential and actual demand, such as Gangnam, Yongsan, and first-generation new towns, are attracting attention, and a long-term holding strategy of 10 years or more will be more valid than chasing short-term price gains. Actual residents should secure location premiums by utilizing loans before the third phase of DSR, manage cash flow meticulously, while investors should build the stamina for long-term holding and create an asset structure that is not shaken by policy changes and market volatility.
The housing industry is urging the Lee Jae-myung administration to ease excessive regulations, expand supply, and provide liquidity support. Improving the ratio of mixed-use buildings in commercial areas, raising standard construction costs, allowing early conversion of private rental housing to sales, expanding tax support, and easing loan regulations are cited as urgent tasks. In particular, there are loud voices calling for the resolution of unsold units in provinces and support for the normalization of Project Financing (PF).
In the short term, fluctuations in trading volume are expected before and after the implementation of the third phase of DSR. In popular Seoul and metropolitan areas, the price decline potential is low due to base rate cuts and a supply-shortage structure, and it is expected that a seller-dominant market will persist even if trading volume decreases. Provincial and outlying areas may see prolonged stagnation due to unsold units, population decline, and a lack of demand base. In the mid-to-long term, various risks such as PF insolvency, policy execution efficacy, and the transition of jeonse to monthly rent persist.
In conclusion, the 2025 South Korean real estate market can be summarized by three keywords: policy fatigue, polarization, and supply cliff. While the Lee Jae-myung administration's pragmatic policy shift provides positive signals to the market, specific execution and the restoration of market trust are more important than anything else. At times like this, one must focus on the fundamentals of real estate—location, future value, and actual demand basis—and sticking to the "smart single home" strategy with a mindset of long-term holding and endurance rather than chasing short-term price gains is the way to survive in the post-2025 South Korean real estate market.
Real estate is about response, not prediction. The market does not move according to my will, but I can control the flow of my assets. Only a "smart single home" equipped with location, structure, and a financial plan will be able to protect the future.
Kim Hak-ryeol, head of the Smart Tube Real Estate Research Institute and famous by the pen name "Pashong," served as the team leader of the Real Estate Research Headquarters at Gallup Korea. He operates and hosts the Naver blog "Pashong's World Exploration" and the YouTube channel "Stew TV." He is the author of "The Power of Gyeonggi-do Real Estate (2024)," "Absolute Principles of Seoul Real Estate (2023)," "The Future of Incheon Real Estate (2022)," "Kim Hak-ryeol's Absolute Principles of Real Estate Investment (2022)," "Future Map of South Korean Real Estate (2021)," "From Now On, Only Places That Rise Will Rise (2020)," and "South Korean Real Estate User Guide (2020)," among others.