The South Korean government has imposed stricter regulations on foreign real estate transactions by designating key areas in the capital, Seoul, as foreign land transaction permit zones. This policy was introduced in August of last year to curb speculation in the housing market and has had a substantial impact, with foreign home purchases in Seoul dropping by 51% in just three months following the implementation. In comparison, the overall foreign home transaction volume in the greater Seoul area fell by 35%, indicating a widespread effect across the region. This move requires foreign buyers to reside in their purchased homes for a minimum of two years, significantly affecting their investment strategies.

The decline in foreign transactions has been most pronounced in high-priced apartment areas, particularly in Gangnam's three districts (Gangnam, Seocho, and Songpa) and Yongsan, where foreign purchases plummeted by 65%. Notably, Seocho recorded the largest drop among the 25 administrative districts of Seoul, with transactions falling from 92 to just 11. Other areas like Bucheon in Gyeonggi Province and Seo-gu in Incheon also reported dramatic decreases of 51% and 46%, respectively. The decline underscores the tightening grip of government regulations on foreign investments in the real estate sector.

While Chinese buyers still dominate the foreign market, the reduction in U.S. purchases has been even sharper, marking a shift in the demographic of foreign investors. Chinese transactions decreased by 32%, while American transactions fell by 45%. The type of properties purchased varied significantly, with Chinese buyers primarily investing in lower-value properties, whereas American buyers are heavily focused on high-value apartments. In response to these changes, the Ministry of Land is working closely with local governments to ensure compliance with residency requirements and maintain the effectiveness of these regulations against real estate speculation.