Invest now in apartments for a swift financial boost: elaborate reasoning behind the apartment-driven prosperity trend in South Korea
In the heart of South Korea, the housing market in Seoul has been experiencing a significant surge, with apartment prices on the rise due to a severe supply-demand imbalance.
Since 2020, apartment prices in Seoul have increased approximately 27% annually. This steep rise is attributed to constrained supply, rising demand, and a notable impact from foreign buyers, particularly from China, who own a substantial share of residential properties in the city. As a result, median households in Seoul are spending more than 150% of their income on housing costs according to the Korean Housing Affordability Index in early 2025.
Despite cooling housing prices in other regions of South Korea during the first half of 2025, Seoul’s housing prices continued to rise, increasing by 0.39% in that period amid easing financial conditions and expectations of further increases. Looking ahead to the rest of 2025, apartment prices in Seoul are projected to rise by about 3%, contrasting with a nationwide slight price decline, reflecting continued strong local demand and limited new supply.
The supply side remains tight, with the volume of apartments available for occupancy in 2025 expected to drop by over 100,000 units compared to averages of recent years, exacerbating pressures on both purchase and rental markets. This tight supply has spurred government discussions about boosting housing supply, especially via speeding up construction and urban maintenance projects, easing financing restrictions for developers, and streamlining public housing development approvals to better match demand.
Notably, the Lotte World Tower in the Songpa District houses an observatory, and the Raemian One Bailey apartment complex in the Seocho District offers a cafe with a view of the Han River. Another apartment complex, Seoul Sky, is also located in the Songpa District. In Gangnam, southern Seoul, the Gaepo Xi Presidence developed by GS E&C boasts an infinity pool.
However, the Bank of Korea's report does not specify the exact reasons for the housing price trends, nor does it mention any specific areas within Seoul that experienced the slowest growth. Furthermore, the report does not provide data on housing prices for the second half of the year, and it does not discuss the long-term implications of the slow growth on the housing market in Seoul.
As the housing market in Seoul continues to evolve, challenges around affordability and supply bottlenecks persist. Policy measures aiming to expand supply and regulate financing are underway, but they face structural hurdles that maintain upward price pressure in this key metropolitan area. The Korean government is urged to present a clear housing supply roadmap to address the rising rents and ensure a more balanced housing market in Seoul. Despite the slowest growth since 1960 amid increased prices, the fever for apartments in central Seoul remains unshaken.
- The enormous increase in apartment prices in Seoul has drawn the attention of foreign investors, particularly from China, who have significantly contributed to the purchase of residential properties in the city.
- The Korean government is actively seeking solutions to boost housing supply, considering the tight market, as evidenced by discussions about speeding construction, easing financing for developers, and streamlining public housing development approvals.
- In the face of a projected 3% increase in apartment prices in Seoul for the remainder of 2025, contrasted with a nationwide decline, concerns around housing affordability and a more balanced market persist.
- Domestic and international investors alike may find the ongoing rise in apartment prices in Seoul an appealing opportunity for real-estate investing in this key international financial hub.
