Calls grow to curb speculative homebuying by foreigners
The government is facing growing calls to curb the purchases of homes in Korea by foreign nationals, who could obtain mortgage loans from banks abroad and are subject to less stringent borrowing regulations than Koreans.
Some are even demanding restrictions as a reciprocal measure against countries where foreigners, including Koreans, are restricted from owning homes.
As of July 2023, foreigners accounted for 1.4 percent of total home purchases here. While this percentage may seem modest, it has been steadily increasing from 1 percent in 2021 to 1.2 percent in 2022. Also, fierce competition to buy homes in the crowded capital, where real estate prices have been escalating rapidly, has amplified the concerns of local residents regarding foreigners buying homes in Seoul under more favorable conditions.
Concerns have been growing among Koreans that they may no longer be able to afford homes due to increasing price pressures, particularly in Seoul and the greater metropolitan area, where over half of the country’s entire population of 51.7 million resides. This issue gained significant attention last year when a unit of Parc Hannam, a luxurious apartment in Seoul, was purchased by a Malaysian for 18 billion won ($13.5 million), marking the highest price ever recorded for an apartment in the city. Additionally, a U.K. national reportedly bought a unit in Hannam The Hill, another luxury residence located nearby, for 11 billion won last year.
“The government will need to keep track of policies in other countries and take corresponding measures, in accordance with the principle of reciprocity under international laws,” Kwon Dae-jung, a real estate professor at Sogang University, said Monday.
He assessed that reciprocity will be “crucial to prevent foreign nationals from exploiting loopholes in housing regulations here and to ensure they do not ironically discriminate against our own citizens.”
Kwon’s remarks came a day after the Canadian government announced a two-year extension to a ban on foreign ownership of homes to tackle a worsening housing crisis.
The ban, previously set to expire on Jan. 1, 2025, will be effective through Jan. 1, 2027.
Foreign commercial enterprises as well as individuals who are not Canadian citizens or permanent residents are prohibited from buying residential property either directly or indirectly.
Australia also enforces restrictions on home ownership for foreigners, allowing them to purchase only one established dwelling, which must be occupied by the owner.
In China, foreigners are mandated to reside in the country for at least one year to be eligible for property ownership. However, in practice, they only obtain the right to lease property from the government, as all land is legally owned by the state under communist law.
“Unfortunately, Korea’s regulations seem to lack such details, prompting individuals from a certain country to go on a property buying spree,” Kwon said.
He cited data from the Ministry of Land, Infrastructure and Transport, which showed a more than threefold increase in the number of land owned by Chinese nationals between 2016 and the first half of 2023.
A total of 24,035 cases were reported in 2016 and the figure jumped to 72,180 by the end of June last year.
Separate data from the ministry showed that Chinese nationals owned 47,327 homes as of June 2023, which accounted for 54.3 percent of the 87,223 homes belonging to foreign nationals.
The number of homes owned by Chinese residents was far larger than 20,469 homes purchased by Americans, 5,959 by Canadians, 3,286 by Taiwanese and 1,801 by Australians.